Even with a new round of casino planning, Taiwan's casino future is unknown.
New markets in Asia remain a huge long term growth opportunity for WYNN and LVS but Taiwan, while still likely at some point in the future, may have to wait.
Recently, two casino development bills stalled in Taiwan's government. The legislative session ended (Chinese New Year) without approval of the bills—1) Casino management law under the supervision of the Roads, Highways, & Railways Department and 2) Tourism project with gaming features led by the Taiwan Tourist Bureau (TTB). But that hasn't stopped the TTB from continuing its push for casinos on Taiwan's offshore islands (IRs on Taiwan's mainland is out of the question).
The TTB has authorized a Macau-based consultant company, Ocean Tech Group, to conduct a feasibility survey to 40 potential operators from Las Vegas, Macau, and other regions regarding location, land size, investment amount, casino size, length of license, and other logistics for an IR on one of Taiwan's 6 offshore islands: Hsiau Liouchiou, Kinmen, Lanyu, Lyudao, Matsu, and Penghu. Ocean Tech Group will design the IR concept to include a theme park, hotel, expo, shopping mall and casino for the government. The survey will not have any effect on the license bidding process. Sources say TTB may receive all the surveys by the end of this week.
Kinmen has been mentioned as a front-runner given the Taiwanese government’s plan to introduce FIT travel for Chinese visitors to Kinmen in April 2011. But that's assuming Mainland China goes through with this immigration change, which is never a certainty. Reports also indicate that on Kinmen, a petition for a referendum has been submitted to the Executive Yuan, a process that is anticipated to take at least six months.
Meanwhile, Penghu may have a second chance as it hopes to submit another casino proposal by mid-2011. However, Chang Jui-Tung, director-general of the Penghu County government's Civil Affairs Bureau, had said that the failed 2009 referendum means the Taiwanese government will have to wait for three years to conduct another related referendum on the island. Recall that the citizens on the island of Penghu voted to block the construction of Taiwan's 1st casino in 2009. A tender was held by the Tourism Agency and two foreign companies submitted bids but both were rejected because they didn't provide all the required documents.
The Ministry of Transport and Communication (MOTC) has indicated that any IR proposals should be based on a opening by the end of 2013. But before any bill is submitted to the Legislature Yuan, it must pass through numerous public hearings and consultations, which can last many months. The purpose of these forums is to gain the support of the local communities. This is not an easy task.
The MOTC and TTB may be hoping for an IR. But hope is not an investment process. Frankly, Taiwan and its offshore islands are not in any hurry to open up an IR. They don't need the business right now as Taiwan GDP grew 10.8% and visitation soared to a record 5.6MM in 2010. Maybe the offshore islands will follow the example set by Hainan, China's only tropical island, which earlier last year passed on becoming a gambling hub to focus on natural scenery in its quest to become a top tourist destination.