Japan casino resorts could cost nearly $12b

The three Japan casino resorts expected to be authorised in the coming months by the federal government will come with lofty price tags, as the world’s largest gaming operators up their antes to win one of the coveted licenses.

Osaka and Yokohama are the two leading cities for two of the integrated resorts.

Yokohama city officials report that their request for information phase revealed several casino operators are ready to invest nearly $12 billion (JPY1.3 trillion) in a resort complex.

Yokohama, the second largest city in Japan, says 12 companies submitted draft proposals. A few of the gaming operators that presented schemes include MGM Resorts, Wynn Resorts, Melco Resorts, Caesars Entertainment, Genting Group, and Galaxy Entertainment.

Yokohama is a preferred destination, as the large city is near the Tokyo capital. But Osaka is the frontrunner for MGM and Las Vegas Sands – the two casino operators considered the favourites for licensure by gaming industry analysts.

Sands was not one of the 12 companies that submitted plans for Yokohama. Last week, the casino operator’s director of global development said the company isn’t interested in investing in an area not located near a major metropolis.

Macau 2018 growth forecast at 5.8%

The Macau economy is expected to grow 5.8% for this year, followed by 3.9% growth in 2019, according to a report by the Economist Intelligence Unit (EIU).

Macau 2018 growth forecast at 5.8%News outlet The Macau Hub reported on the EIU’s forecast that the special administrative region’s growth in gross domestic product (GDP) will continue to be fueled by the gaming sector, which itself has seen below-expected gross gaming revenue (GGR) the past year.

Macau’s Statistics and Census Service (DSEC) had previously released data for the first half of the year, showing 7.6% GDP growth year on year.

The EIU said that the Macau government’s attempts at diversifying the economy outside of gambling would remain largely unsuccessful. However, according to the EIU, the government should continue working to grow its non-gambling tourism activities to boost the entertainment sector.

With Typhoon Mangkhut hitting the city the other weekend, several analysts had adjusted their GGR forecasts for the quarter. The overall effect on the economy, however, is seen to be negligible.

The EIU expects a slowdown in mainland China’s economy will affect Macau; however, this will be offset somewhat by increased incomes to be spent by visitors from China.

Chinese tourists remain the hugest population among those visiting Macau, with 2.53 million Chinese visiting last August, a 25.3% increase from August last year. A total of 3.4 million people visited in August, a 18.7% increase year on year.

Macau’s strong 2017 performance, much on account of growth in the VIP gaming business, was preceded by three years of contraction owing in part to the Chinese government’s anti-corruption drive where it cracked down on outflows to Macau.

According to the EIU, inflation for 2018 is expected to hold at 2.9%, lowering to 2.8% the following year. The budget balance will be at 10.3% for 2018, and 9.4% in 2019. The unemployment rate is projected to stay at 1.9% for the two years.

Crown Casino sees 10% drop in revenue

Crown Perth has fallen out of favor with rich Asian gamblers. The result is a drop in revenue of almost 10%, according to an announcement by the Gaming and Wagering Commission. From July 1, 2017 to June 30, 2018, the casino saw its gross gaming revenue (GGR) fall to AU$564 million (US$409.8 million).

Crown Casino sees 10% drop in revenueThe drop was propelled by a staggering 24% decline in revenue from baccarat, a standard favorite among Asian gamblers and typical for those with extremely deep pockets. In total, the casino’s baccarat GGR was $163 million (US$118.4 million). Since 2014, baccarat GGR has fallen a total of 57% at the casino. At its highest, it was bringing in $383 million (US$$278.3 million).

The Crown Resort company, owner of Crown Perth, had hoped to promote itself as the ultimate gambling destination for rich Asian gamblers as part of a $650 million (US$472.5) million redevelopment plan. That plan got off to a strong start, but a crackdown on foreign gambling companies by Chinese officials has resulted in a decrease in popularity.

That crackdown hurt baccarat, as well as Crown. In 2016, 19 Crown employees were arrested for participating in crimes that went against China’s stiff anti-gambling policies. The employees, one of whom was Crown senior executive Jason O’Connor, were eventually released and Crown agreed to pay a hefty fine for their actions.

Crown revenue also dropped due to a slowdown in other gaming sectors. Blackjack and roulette slipped to 8% and 11%, respectively, only attracting $34 million (US$24.7 million) and $53 million (US$38.5 million).

The electronic gaming machine sector shored up the company’s revenue in spite of a drop to $263 million (US$191.2 million) in turnover.

Crown has had a rough couple of years. Revenue has been sliding and public scandals have continued to plague the company. It has been called out for allegedly fixing slot machines, a claim that it has repeatedly denied in spite of several whistleblowers coming forward to confirm the activity. It has also lost almost US$500 million due to failed investments over the past decade.

The biggest surprise was when James Packer announced that he would be giving up his position of Crown Resorts executive chairman. Packer, who owns just under 50% of the company, made his announcement earlier this year, stating that he needed to relinquish the position due to mental health issues.

London’s Ritz Hotel Casino reports huge losses

2016 was a good year for the Ritz Hotel Casino in London. The venue, which is owned by the Barclay brothers, reported a pre-tax profit of $11.64 million for the year, giving it a substantial foundation upon which to continue to build. Unfortunately, things didn’t go quite as well as the Barclay brothers would have liked for the its latest fiscal year and the casino saw a loss that completely wiped out the previous year’s pre-tax profit, and then some.

For the 2017 fiscal year, the Ritz reported a loss of $15.3 million (£11.7 million). Overall, the property’s revenue dropped to $29.1 million from the $43.1 million it reported in the year prior. It indicated that it has seen the same level of traffic between the two reporting years; however, profit was impacted by an increase in payouts to customers.

The company hopes to turn things around in 2018. It said in its revenue filing, “Efforts to encourage new Middle East and Far Eastern players remain focused and business in 2018 is expected to be more fortuitous.” Aidan Barclay, who is the son of David Barclay and sits on the company’s board, added, “Business in 2018 is expected to be more fortuitous.”

The Ritz hotel has been around since the beginning of the last century. It was previously a ballroom, a restaurant and an entertainment venue and the casino was added in 1977. The Barclay brothers purchased it in 1995.

There has been talk in the past that the Barclay brothers, who also own the Daily Telegraph, could try to sell The Ritz Club, the gambling portion of the venue. In December of last year, rumors circulated that the two had appointed an advisory company to manage the sale, but they never provided comments on the subject. They reportedly had been approached by someone interested in buying the property, at the time reportedly worth around $261.5 million.

Back in 2011, there was also an announcement that the brothers were considering the sale of the property. At the time, the Barclays said that they had received several takeover bids for the operation, but nothing further developed. The Ritz Hotel was said to be worth $817.2 million then, and a sale probably would have made a lot of sense in hindsight.