THE M3: SANDS DIRECT PLAY; SJM TAIPA; SANDS DELAY COTAI; DRAGONE; SLOTS; MBS LAWSUIT

The Macau Metro Monitor, August 12th, 2010

DIRECT PLAY Inside Asian Gaming

IAG believes the difference in LVS's rebate rate in Macau (0.9%-1%) vs in Singapore (1.2%), and Singapore's lower taxes give LVS incentives to shift its Macau DIrect VIP players to Singapore.  But a source familiar with the VIP trade around the Asia Pacific region said, " A lot of high rollers travel regularly around the region for business and may have a home in more than one city. For them, it may not be a choice of playing either in Macau, Melbourne, or Singapore. It may be a case of the more destinations they have to try their luck, the better."  Nevertheless, IAG thinks credit risk in Macau and the Lion City factor would cause LVS to realign its Direct VIP business and focus on Singapore. 

 

Also, IAG had reported some Macau junkets were offering 0.2% of a player's rolling turnover to third parties in order to convert Direct players into junket players.


A TALE OF TWO CITIES Inside Asian Gaming

SJM-licensed Taipa casinos--Greek Mythology (New Century), Macau Jockey Club Casino, and Grandview-- are significantly underperforming in revenue terms.  Their 200 tables (almost as many as Grand Lisboa) could boost SJM's profitability if at least some of the mass tables were reassigned to busier floors on Taipa.  The presence of those 200 SJM tables in Taipa gives SJM and affiliates coverage in the southern part of the Macau market.  The Government's position so far has been to restrict any further expansion of gaming in suburban areas.

The mass market prospects of Greek Mythology have been overlooked by Ho family interests in order to focus on Altira. The 16 VIP tables at Greek Mythology actually outperformed relative to Altira, but its 100 mass tables are often empty. 

SANDS CHINA DELAYS MEGA CASINO PLANS IN MACAU Reuters, macaubusiness.com

Sands China said a worker shortage will delay the opening of its Cotai resort to 4Q 2011 from 3Q 2011.  "That [delay] will affect the ramp-up of the product and will affect the short-term income situation. But the cost of the product will be the same," acting CEO Michael Leven said.  "Sands China has 1,293 workers (mostly locals) at its project," Leven said.  "We're about half the amount we needed for this particular time," he said, adding that the firm would need 10,700 workers (30% locals) at its peak. "We expect over the next six weeks to get closer to our goals."  In addition, Leven said the name of its Cotai project could be decided by September.

As for the search of Sands' CEO, Leven hopes to find a replacement by the end of the year, adding that it is hunting externally for someone with Asian experience, particularly in China, among other traits.  Leven also wants to bring in more junket play without increasing the commissions.

MACAU CASINO MAKES A SHOWY SPLASH, BUT WILL PUNTERS COME? Intelligence Macau, AFP

IM is not expecting much from Dragone.  According to an IM survey, less than 1% of visitors at the border points said a show, e.g. House of Dancing Water, was something they would consider.  House of Dancing Water ticket prices go for MOP 400 and the average stay for a Macau visitor is only 1.5 nights.

SCHOOL OF HARD KNOCKS Inside Asian Gaming

IAG believes the process of localization will take time in Macau and that Galaxy and Sands will raise construction sector wages to attract locals from other sectors--a wage fight that could lead to an upward inflationary spiral. In addition, according to sources, casino dealer jobs, pit supervisor and pit manager jobs are reserved for permanent residents, which force locals to attend higher education.

A GROWING GAME Inside Asian Gaming, Hedgeye

Lindsay Stewart, VP of Electronic Gaming, SJM: "Not all our slots are systemized yet. Once that happens, we hope within 12 to 18 months we will have far more firepower in terms of being competitive with these big guys.... There's one manufacturer [Aristocrat] that still holds sway."

Peter Johns, Director of Slot Operations, MGM Macau: "We constantly get slots at around 20% now of the mass floor revenue (July 2010: 23.7%).... At my last count there were 23 vendors selling machines in Macau. Most operators stick to the top six [manufacturing] names."

 

Darrin Carlson, Slot Manager-operations Sands China:

"Slots will progress just like they did in Las Vegas."

SANDS, SINGAPORE LAW GROUP SAID TO SETTLE UNPAID BILLS DISPUTE Bloomberg

The joint statement by Marina Bay Sands and IPBA stated that the suits will be discontinued as part of an amicable, confidential settlement.