THE BACK PAGE: Putting Asia first
February 21, 2012
Another year, another round of firsts for the Asian gaming market.
Chinese New Year made for a very happy January, not just in the world gaming capital of Macau, but anywhere Chinese gamble, which is just about everywhere in the world. This year, people will stop talking about how Macau is six or seven times larger than Las Vegas, and they will note that it has become larger than the entire American commercial casino and racetrack gaming industry.
That would be nothing more than a fun fact for most American operators, if, that is, the impacts of the Asian market were confined to Asia. They’re not.
Asian gaming money is a factor in some of the biggest headlines in the American gaming industry at present. Resorts World doesn’t propose a $4 billion public/private partnership with the state of New York to build the largest convention center in the country without its holdings in Malaysia and Singapore. Nor do they compete with Asian gaming powerhouses Wynn Resorts and Las Vegas Sands without it either.
The entire investment climate in the American gaming industry has benefitted from Macau and Singapore. Think of the alternative headlines post-2008 for Wynn, LVS and MGM Resorts if they hadn’t been able to pull enormous cash flows out of Asia. They wouldn’t have been the only companies suffering, certainly.
The impacts go beyond perceptions, however, should the expected eventually happen; that is New York gets live table games and legalizes commercial casinos and Florida, perhaps not this year but maybe next (or the year after that; this is gaming legislation, we know to be patient), several of the top brands in the casino industry will have unparalleled global marketing platforms, being able to shuttle and/or cultivate high-end play to and from some of the nation’s most glamorous destinations-New York, Miami and Las Vegas. The way the world is going, staying on the sidelines in the global battle for high-end Asian play could put one at a permanent competitive disadvantage.
That’s why it was smart for a company like Pinnacle to get in the game by taking a stake in one of what will be a five-project development on the Ho Tram Strip outside of Ho Chi Minh City in Vietnam. Pinnacle made that move last May, and, by October, it had a new Asian gaming powerhouse competitor in its critical Lake Charles, La., market, when Dan Lee’s Creative Casinos entered into an operating agreement with MGM. Vietnamese players coming out of the number one feeder market Houston are an important part of the Lake Charles business. Being able to cross-market Lake Charles with a world class destination in Vietnam is a neat hook that only MGM would have been able to exploit had Pinnacle not made its earlier investment in Ho Tram developer Asian Coast Development Ltd.
The good news is as new markets open up in Asia, new opportunities will arise for other gaming companies who have yet to diversify to do what Pinnacle did in Vietnam; strengthen its overall competitive position and being able to offer new forms of value to rated players. As our “Focus on Asia” story (see pages 24-26) also illustrates, Myanmar (the former Burma), Cambodia, The Philippines, Japan and Taiwan each hold the potential for more growth in Asia. India and Korea have also been discussed as opening the door to new casinos. All of this takes time, and the immediate benefits might not seem compelling, but Asia is only getting wealthier, the American casino market is only getting more competitive, and high-end players will be able to pick and choose to an unprecedented degree. The spillover effects will touch all operators, not just the big names.
Asia is to the global gaming industry as the Internet is to the content business. “What’s your Asian strategy?” is fast becoming the equivalent of “What’s your Internet strategy?” In both cases, if you’re of a certain age, you never thought you’d need one. But here we are.