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| Dragons Treasure at City of Dreams, Macau |
This is the final part of a 3-part series by InPark News Editor Joe Kleiman
Click to see: Preview Part 1: The Vegas Pack Part 2: Genting
Gambling Laws
While gambling has always
been a cultural institution in the Asia/Pacific region, Western style
gambling has never been at the forefront of the region’s economy
until recently. Each nation has a different approach to casino
regulation, based upon colonial law (Singapore’s laws are based on
those in British, while Macau’s are based on the Portuguese), the
desire to prevent gambling debt and addiciton among local
populations, and a governmental directive to weed out criminal and
terrorist elements.
Australia
Casinos have been in
operation in Australia and New Zealand since 1973. In 2008, the Allen
Consulting Group issued a report, Casinos and
the Australian Economy, on behalf of the
Australasian Casino Association, to the government’s Productivity
Commission Inquiry into Gambling. The report found that:
· Over 1
million international tourists made 2.4 million visits to Australian
casinos in 2007/08. These tourists spent a total of $4.9 billion
during their time in Australia – an average of $4940 per visitor,
compared to $2630 by international visitors not visiting casinos.
· A group of
international visitors, known as international VIP program players,
spent $739 million during their visits to Australia in 2007/08.
Expenditure associated with these players increased gross domestic
product by $84 million in 2007/08. Maintaining this export will raise
Australian private consumption by $1.8 billion over a 10-year period.
The
largest of the casinos in Australia is the Crown Entertainment
Complex in Melbourne, one of two casino resorts (the other in Perth)
operated by Crown, a spinoff of Publishing and Broadcasting Limited.
The Crown Entertainment Complex in Melbourne is
one of the largest integrated resorts in the southern hemisphere with
its casino, hotels, function rooms, restaurants, shopping and
entertainment facilities.
The
casino currently features 2,500 electronic gaming machines and has
approval to operate 500 table games. The Crown Melbourne casino
licence extends to 2033. Crown Melbourne operates one of the largest
single-site VIP operations in the world. Its three hotels offer
approximately 1,600 rooms, including 31 luxury villas.
Crown, like Malaysia’s
Genting, has become a major international casino operator. It’s
investments include a betting exchange in Australia and New Zealand;
Cannery Casino Resorts, a casino and racetrack operator in Las Vegas,
NV and Pittsburgh, PA, USA; Aspers Holdings, which runs regional
casinos in the UK; minority stakes in the Las Vegas-based Harrahs and
Stations casino chains; and a 33% stake in one of the biggest players
in Asia –Melco Crown.
Macau
Melco Crown is a direct
descendant of Macau’s gambling heritage. From 1962 through 2002,
the Sociedade de Turismo e Diversões de Macau,
under the control of Stanley Ho, held a monopoly on gambling
operations in Macau. Once Portugal handed the tiny colony back to
China, the Chinese government began handing other licenses. Ho still
controls 14 of the casinos, with an additional three under the
control of Melco Crown, headed by his son Lawrence.
Of the three, the largest
is the City of Dreams, which the company describes as “a unique
integrated resort combining electrifying entertainment, an amazing
array of accommodation, regional and international dining,
designer-brand shopping as well as a spacious and contemporary gaming
experience. With Dragons Treasure, a spectacular multimedia
attraction and recipient of the prestigious “2009 Thea Award for
Outstanding Achievement” from the Themed Entertainment Association,
and the Boulevard, a chic lifestyle precinct encompassing
entertainment, restaurants and boutiques, City of Dreams has
established itself as a premier leisure and entertainment destination
in Macau.”
The resort features a
420,000 square-foot casino, three hotels with 1,400 guest rooms, and
over 20 dining locations. Earlier this year, the resort’s show
"House of Dancing Water" was honored by Thea Award.
Melco/Crown’s other
Macau properties include the Altira Macau, a 38 story, 216 room
luxury hotel, and the Mocha Clubs, with 2,100 machines at 10
locations around Macau. The company had bid to develop the second
casino resort in Singapore, on Sentosa Island, but lost the license to
Genting. That, however, is not keeping them from expansion on Macau,
with a 465,000 square meter project codenamed Studio City at the
border of Macau and Hengqin Island, in mainland China. Melco Crown is
also planning additional resort properties on the Cotai Strip, near
the airport.
Melco’s profits in 2011
were $3.8 billion.
Melco Crown is
headquartered in Hong Kong, which is where you’ll find Lee
Myung-Hee. Listed #721 on the 2010 Forbes billionaires list, he heads
Galaxy Entertainment Group, which has operated casinos in Macau since
2004, when the company launched the City Clubs group of casinos. In
2006, they opened StarWorld, a luxury hotel and casino complex with
over 500 hotel rooms in an iconic tower. In late 2011, their third
brand, the Gary Godard-designed Galaxy Macau opened to rave reviews
and construction costs exceeding $16 billion. Overall, Galaxy
Entertainment Group’s 2011 gross revenues were $5.3 billion, $2.1
billion of that being provided by Galaxy Macau in its first seven
months of operation. It should be noted that Galaxy’s operations
include construction, so the overall figure is not just for casino or
hospitality operations.
Locals or Foreigners
One of the major issues
confronting local governments is how to restrict local gamblers. It’s
one thing to promote foreign gambling tourism, but its another to
provide an outlet for gambling addiction and the social and welfare
issues that result from that. Many countries outlaw casinos
altogether, some, like Vietnam and South Korea restrict locals from
entering casinos, while Singapore charges a hefty “permit” for
locals to gamble over a 24 hour period and an even heftier fee to the
casino operators when someone is found gambling with either an
expired permit or without one.
Governments are starting
to look closely at changing laws in lieu of the fact that
restrictions on locals are sending their citizens and their dollars
to other countries. South Korea, which is about to build a $2 billion
casino resort new Incheon International Airport, is looking at
removing the foreign-only casino rule. Out of 19 casinos currently in
operation in the country, only one allows locals. The Japanese
parliament is yet again tabling a rule to allow legal casinos. And in
Singapore, the rules are being considered for revision in a country
whose two mega-casino resorts offer an array of experiences for locals
– just not gambling unless the permit fee is paid.
Junk in the Trunk
One of those casinos,
Resorts World Sentosa, was recently awarded a license for VIP
junkets. In these VIP junkets, wealthy travelers, often Chinese,
borrow money from junket operators, play in private rooms, and then
must repay the operator upon return home. By arranging the trip, the
junket operator also receives a cut of the profit from the casino.
These arrangements are common around Asia, especially in Macau. A
2009 report by the Asia Pacific Group on Money Laundering, describes
the following issues with VIP junkets:
· Over-reliance
on junket operators, especially in markets with resident populations
that are too small to normally support casinos can pose a heightened
money laundering risk. In these instances, casinos can become overly
dependent on junket operators for business, a potential misuse of
these services.
· In some
jurisdictions, a casino may enter into a contractual agreement with a
junket operator to rent a private room within a casino and in some
situations, it is the junket operator, not the casino, which monitors
player activity and issues and collects credit.
· Junket
operators that provide premium players may exert commercial pressures
on casinos, which may result in reducing scrutiny of individual
spending patterns, or unduly influence or exercise control over
licensed casino operations.
· Junket
operators may engage in lending or the facilitation of lending to
players outside casinos‟ knowledge.
· In some
jurisdictions, junket operators are allowed to „pool‟ and
therefore obscure the spending of individual customers, thus
preventing casinos from making any assessment of customers‟spending
patterns.
· In certain
jurisdictions, licensed junket operators act as fronts for junket
operators in another country. The front operators supply players to a
casino through a casino‟s licensed junket companies which may not
qualify for licensure in the country where the players will be
gambling. Such unlicensed sub-junket operators can act as unlicensed
collectors of credit and may have ties to organized crime networks.
Some Asian casino
operators face an even more potential threat from VIP junkets –loss
of license and even potential arrest. There are concerns based on how
the VIP junkets operate that they may be tied in to Chinese and other
money laundering programs, supporting both criminal activity and
potential terrorist groups. The State of Nevada and the United States
government are both considering investigations into the matter. Wynn,
Sands, and MGM all operate in Macau and Singapore, but they are also
headquartered in Las Vegas and licensed in Nevada and numerous other
states, where financial dealings with criminal elements is against
the law.
What the future holds is
uncertain, but it’s just another price to bear in the brave new
world of the Asian Megacasino.
