Another ‘Vegas’ planned for Vietnam

Vietnam’s potential as a global gambling and tourism destination got its third resounding endorsement in as many months — this time from a group of developers out of Canada who have unveiled plans for a US$4.5 billion casino-hotel mega-complex near Ho Chi Minh City.

The Ho Tram Strip, as it’s called, is “going to out-compete Nevada,” said Michael Aymong, chairman of Asian Coast Development, a Toronto based firm 25-percent owned by Harbinger Capital Partners.

Aymong, who owns 32 percent of Asian Coast, is looking for investors. He’s already secured a big one in New York-based Harbinger Capital, run by billionaire junk bond and hedge funds trader and former professional hockey player Philip Falcone. Harbinger, which Falcone founded in 2001, manages funds totaling $18 billion in assets.

Vietnam's economy grew 8.5 percent last year, the fastest pace since 1996. But the country’s ruling Communist Party historically has been suspicious of casinos, which many Vietnamese consider a social evil. Gambling is illegal with the exception of a foreigners-only casino, Do Son, and a number of machine gaming rooms in hotels open only to foreign and Viet Kieu passport holders. At the same time the government recognizes that regional tourism, largely driven by China’s stupendous economic growth, is one of East Asia’s most dynamic industries. Tourism has emerged in recent years as one of Vietnam’s five largest industries, attracting 4.2 million foreign visitors last year, with 5 million expected this year and up to 6 million predicted by 2010, when the industry will reach an estimated $6 billion to $7 billion in value. With international hotels starting to crowd the “China Beach” area near Danang and investors worldwide floating plans for billions of dollars of investment in resorts and hotels throughout the country, the government appears ready to wade into the capitalist mainstream via gambling if there are significant employment and tourism components attached and private-sector investment in badly needed infrastructure.

In April, U.S.-based Oak Tree Group formally proposed plans for a $5 billion resort and casino in Danang in the secluded coastal mountains of Hoa Van, a leper colony whose inhabitants are slated for eviction to make room for the development. Investors led by Trustee Suisse Group have announced plans for a multibillion-dollar mixed-use resort complex with casinos on the southern island of Phu Quoc in the Gulf of Thailand.

As evidence of this shift in official policy, former Canadian Prime Minister Jean Chretien attended the Ho Tram groundbreaking in May, and Vietnam’s Prime Minister Nguyen Tan Dung has promised his government “will create favorable conditions” for developers there. The project has already been granted a casino license.

The land selected for the complex consists of 432 acres of undeveloped beach and forest near the South China Sea in Xuyen Moc, Ba Ria Vung Tau Province, about 75 miles east of Ho Chi Minh City. It will be built in phases, Asian Coast says, the first phase, pegged at $1.3 billion, to include two hotels totaling 2,300 rooms, a casino with 500 slot machines and 90 table games, a Greg Norman-designed 18-hole golf course, a Cirque de Soleil theater and a water park populated with dolphins. A 2011 opening is projected. Five hotels and another casino are contemplated for the site when full build-out, envisioned for 2015 or thereabouts, is accomplished.

Asian Coast will also invest in highway construction, a ferry terminal and an airport, says Aymong, who is expecting about two-thirds of visitors to come from China, with South Korea, Japan and Russia also supplying big numbers. He also says he believes the government eventually will relax its ban on gambling by Vietnamese citizens. He adds, however, that Ho Tram will represent a more family-friendly destination and is not designed to compete with Macau.

“This is a different type of product,” he told Agence France-Presse. “It’s a destination resort. Our real competition is going to be Singapore.”

He said Asian Coast has letters of intent from “a couple of international hotel chains” that want in on Ho Tram, though he declined to name them. He said the company also is talking with about 10 casino operators that have expressed interest but did not identify those either.

Beijing slaps limits on travel to Macaufrom Guangdong

The Chinese government last month imposed new restrictions on travel from the mainland province directly bordering Macau.

Residents of Guangdong will be allowed to apply for visas to travel to the casino enclave only once a month, down from twice a month, according to local press reports. Business and multi-entry travel will be capped at three to five visits per month, down from 10.

It was not known how long the restrictions would remain in place.

Similar limits were imposed in May 2007, and those restrictions caused growth in mainland visitors to fall from 19 percent for the first four months of the year to 13 percent, although visitation quickly rebounded beginning in July and topped 24 percent through December.

Deutsche Bank, which covers four of the market’s publicly listed operators —Wynn Resorts (WYNN), Las Vegas Sands (LVS), MGM Mirage (MGM) and Melco Crown Entertainment (MPEL) — believes the impact will be minimal as far as gambling revenues are concerned. Revenues last year fell only slightly (from 53 percent to 46 percent) after travel was restricted, perhaps because the VIP players who generate more than 70 percent of Macau’s win can use business/multi-entry visas and so are largely insulated from its effects. The remaining 30 percent is mass-market business, and less than half of that comes from Guangdong. Deutsche Bank estimates the portion of the market most likely to be affected represents less than 15 percent of revenues, at least in the short term.

Visitor arrivals to Macau through April were up 11.8 percent year over year. But the portion arriving from mainland China was up almost 30 percent. Mainland visitors comprised the majority of all visitors at 59.6 percent, and 41 percent of those traveled on individual visas.

It was not known why the government imposed the limits. It may be politically motivated, it may be an attempt to curb problem gambling among wealthy high rollers, and to a lesser extent it may be an attempt to manage growth.

Intralot enters fight for license to run Victoria’s Tote

Intralot is reported to be planning a run at the Australian state of Victoria’s A$700 million-a-year wagering and sports betting license.

The revelation was made by The Herald Sun, based in Melbourne, which is speculating on a showdown between the global lottery giant and the current license holder, Tabcorp, and interstate tote operator Tattersall’s for the lucrative racing and betting operation, which is being put out for bid next year.

Tabcorp’s Victoria Tote license expires in 2012.

“We are considered the No. 1 sports bookmaker in the world,” Intralot Managing Director John Katakis told the tabloid. “We are a very strong company. We are always serious about business. We don’t do business for fun. We’re very aggressive and we’re here to stay.”

Intralot already holds a lottery license in Victoria, and Katakis said the company also plans to bid for the monitoring system for the state’s $2.5 billion machine gambling industry, which also is up for grabs in four years.

Tabcorp and Tatts lost the monopoly to run the “pokies,” as slot machines are known Down Under, and observers suggest the two could join forces as a defensive maneuver, creating in the process an Australian betting superpower.

S. Korea mobile giantbuys stake in China’sWeb gambling market

South Korea’s leading mobile phone carrier has purchased a 30 percent stake in Shanghai-based service provider Magicgrids Network as part of a plan to “aggressively” advance into China’s online gambling market.

SK Telecom spent US$7.8 million for the stake, designed to strengthen the company’s expansion into China’s Internet markets.

The company predicts that online gambling will play a critical role in the ongoing convergence of delivery platforms that is being driven by global media and entertainment.

 “Following the telematics, music, and entertainment industries, now we are heading toward the Chinese game market,” said Suk Hwan Lee, president of SK Telecom China Holding Co. “By participating in the management of Magicgrids Network, we aim to enhance our core competitiveness in the Chinese online gaming market and become a hub for the Asian game industry.”

SK Telecom says it will grow Magicgrids Networks by combining its expertise in game development, publishing and global services with Magicgrids’ understanding of and experience in the Chinese market. The company says also it will achieve synergies with the Korean game industry by outsourcing game content in China, establishing a global distribution channel for Korean games.

Thaksin is back: Ousted Thai leader now eyeing Cambodia

Talks 'unofficial'

Thailand’s ousted former Prime Minister Thaksin Shinawatra is reported to be interested in developing a casino in Cambodia.

The province of Koh Kong has caught the eye of the controversial telecommunications magnate, according to army Gen. Teah Banh, the country’s defense minister, who told the Bangkok Post that talks with Thaksin were still “unofficial”.

“Prime Minister Hun Sen trusted and wanted Mr. Thaksin to advise on developing Koh Kong as a special economic zone,” the general said.

The province currently is home to a casino operated by Koh Kong International, a company owned by Pat Supapa, a Cambodian senator and Koh Kong’s former governor.

Thaksin was deposed as Thailand’s prime minister in 2006 in a military-backed coup and was exiled from the country. He returned earlier this year and is awaiting trial on corruption charges.

New name, new boss, same dream

CROWN JEWEL — City of Dreams is scheduled to open in phases beginning in March 2009. Located on 26 acres on Macau’s Cotai Strip, the $2.1 billion megaresort ultimately will contain three hotels totaling 1,600 rooms and a wealth of attractions, including 3,000 slot machines and 450 table games spread across 420,000 square feet.

The Melco-PBL partnership has a new name and a new chief executive for its multibillion-dollar City of Dreams project on Macau’s Cotai Strip.

Shareholders of the Nasdaq-listed casino giant have agreed to the proposed name change by which Melco PBL Entertainment is now known as Melco Crown Entertainment. The ticker symbol, MPEL, remains the same.

The new moniker reflects the new ownership structure of one of its principal shareholders, Australia’s Publishing and Broadcasting Ltd., which split its gaming and media holdings into separate ASE-listed entities, Consolidated Media Holdings and Crown Ltd., the owner of the gaming assets, which include PBL’s stake in MPEL.

Greg Hawkins, who was chief executive of the company’s Crown Macau, was named to head up the City of Dreams project as CEO. He is being succeeded at Crown Macau by the property’s CFO, Keith Heise.

Hawkins was general manager of SkyCity Entertainment Group before joining Melco and before that held senior management positions at Crown Melbourne and Victorian TAB.

Heise, a former KPMG accountant, was previously vice president of finance at Melco rival Las Vegas Sands’ Venetian Macao.

MPEL finally broke into the black earlier this year. The joint venture between billionaire James Packer, Australia’s richest man, and Lawrence Ho, son of Macau casino tycoon Stanley Ho, posed earnings of US$43.2 million, or 10 cents per share, in the first quarter, compared with a loss of $27.2 million in the same period a year ago.

Significantly, the company recorded an amazing $19.4 billion in rolling chip volume, up from $8.5 billion at the end of last year. The figure represents chips sold to VIP gamblers by junket operators — coin of the realm in Macau’s casinos. Crown Macau has touched off a war for the VIP trade, which constitutes the lion’s share of the peninsula’s $10 billion-plus in annual gaming revenues, when it raised the commission rate on rolling chip sales to 1.35 percent. Crown was struggling at the time, and the increase was part of a deal with junket conglomerate A-Max to steer Chinese high rollers to the casino’s private baccarat rooms.

The issue is a huge one for the future of the market, so much so that the government recently brought together leaders of the six casino concessions in an effort to broker a truce around the idea of a compromise that would cap commissions at 1.25 percent.

IN OTHER NEWS …

Will Hay

—Next month’s Australasian Gaming Expo is expected to post record registrations for the August 24-26 conference at Sydney Convention and Exhibition Centre. More than 180 exhibitors have reserved space to showcase their products. … “The original local mainstream manufacturers now operate worldwide — companies originally set up in Australia now generate more revenue internationally than domestically,” said Ross Ferrar, executive director of the Australasian Gaming Machine Manufacturers Association, which produces the event, now in its 18th year. … Australia is home to about 200,000 gaming machines for an adult population of 15.6 million. For information and registration visit www.AustGamingExpo.com.

—Online operator PokerStars has opened Macau’s first live poker room, PokerStars Macau, in the Grand Waldo Hotel and Casino in Cotai. The 250-seat room will offer cash games and weekly tournaments. The Asia Pacific Poker Tour will kick off at the casino in September.

—Taiwan’s Taipei Fubon Bank has been awarded a five-year contract to operate Vietnam’s new sports lottery. Ticket sales were launched in May and were projected to generate US$350 million in revenue this year and $1 billion in 2009, with a portion of proceeds earmarked for the development of sports programs and aid to the physically impaired.

—Will Hay has been appointed senior vice president of Asia-Pacific Development for MGM Mirage Hospitality, the hotel development subsidiary of casino giant MGM Mirage. A property development veteran and a member of the Hong Kong and New York bar associations, Hay most recently was managing director of Hong Kong-based China Property Group and previously served as general counsel for Colony Capital Asia Ltd.

—Global Entertainment Group has acquired Global Gaming Leisure, a junket operator with interests in Macau, for ₤2 million. Global Entertainment Group is a Hong Kong-based media and entertainment conglomerate specializing in film and television production, cinema operations, artist management and gaming and risk management.

—New Zealand Lotteries has launched an online sales channel, www.mylotto.co.nz.

—Cotai Waterjets has received permission from the Macau and Hong Kong transportation departments to begin operating its Cotai Strip ferries with increased frequency and at night. The expanded service runs between the Hong Kong-Macau Ferry Terminal at Shun Tak Centre using boats purchased by a subsidiary of Las Vegas Sands.

—PacificNet CEO Tony Tong has been elected a member of the Euro-Asian Cooperation on Gaming Association, a trade group of operators, suppliers and regulators founded in 2006 to promote development and growth of the industry.

—Online gaming software giant CryptoLogic has signed an agreement with South Asia online operator Khel Galli to develop and launch a Web gambling portal, KhelGalli.com.

—International Lottery & Totalizator Systems has signed an agreement with Two Jo Company to supply an online lottery system and terminals for installation and operation in Mongolia. Under the terms of the US$1.4 million agreement, ILTS will deliver a turn-key system including central system hardware and software and terminals, installation, training and technical support.

—Elixir Gaming Technologies has appointed Traci Mangini senior vice president of corporate finance, reporting directly to CFO David Reberger.

—Royce & Bach has appointed Asian Pioneer Entertainment exclusive distributor in Macau for the Slovenia company’s electronic multiplayer table games.

—Clarion Gaming is partnering with Hong Kong-based Beacon Events on an Asian version of Clarion’s annual European Gambling Briefing conference. The Asian Gambling Briefing will be held October 21-22 in Singapore.