Bloomberry sees drops in VIP in 3Q24, Entertainment City compensates Solaire North earnings

Kelsey Wilhelm

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November 13, 2024

Bloomberry sees drops in VIP in 3Q24, Entertainment City compensates Solaire North earnings

Bloomberry Resorts Corporation saw a 22 percent increase in gross gaming revenue (GGR) during the third quarter, with the first full quarter contribution by its new integrated resort Solaire Resort North.

Despite GGR hitting PHP16.26 billion ($277.11 million) during the period, the company registered a loss of PHP470 million ($8.01 million) due to higher depreciation and interest expenses.

The group indicated that its mass-market segment continued to outpace VIP, with mass table games and electronic gaming machines across its two Philippine properties increasing by 37 percent yearly.

Solaire Resort Entertainment City brought in some PHP12.59 billion ($214.62 million) in GGR, while Solaire North contributed PHP3.67 billion ($62.7 million).

Solaire Resort & Casino, Bloomberry Resorts, Philippines

Enrique Razon, Bloomberry Resorts, Philippines — _{Enrique Razon Jr., Chairman and CEO of Bloomberry Resorts}

Speaking of the results, Enrique Razon Jr., Bloomberry’s Chairman and CEO, indicated that “The business environment remains challenging in Entertainment City as gaming volumes declined. However, the gaming volumes generated by our Quezon City property more than offset this weakness resulting in a 22 percent year-over-year increase in our total Philippine gaming revenues for the quarter. After its first full quarter of operations, we believe that Solaire North’s ramp-up is still on pace.”

Solaire North registered EBITDA of PHP660.01 million ($11.25 million) during the quarter but generated a loss of some PHP1.19 billion ($20.35 million).

During the quarter, the group recorded consolidated EBITDA of PHP4.05 billion ($69.14 million), a drop of 3 percent yearly, with non-gaming revenues totaling PHP2.77 billion ($47.27 million).

Solaire Entertainment City brought in an EBITDA of PHP3.59 billion ($61.21 million) and a registered net income of PHP950.03 million ($16.19 million).

VIP vs mass

VIP rolling chip volume at the group’s Entertainment City property was down by 25 percent yearly, reaching just PHP109.8 billion ($1.87 billion), with VIP GGR falling by 10 percent yearly, to PHP3.6 billion ($61.36 million).

At Solaire North, the VIP rolling chip reached PHP2.2 billion ($37.5 million), with VIP GGR coming in at negative PHP19 million ($323,800).

Solaire Resort North, Philippines — *Solaire Resort North, Bloomberry Resorts*

Solaire Resort North, Bloomberry Resorts, Philippines, — *Solaire Resort North, Bloomberry Resorts*

Looking at mass play, Entertainment City’s table drop was down by 24 percent yearly, to PHP10.5 billion ($178.96 million), with mass table GGR at PHP4.5 billion ($76.7 million), up by 9 percent yearly. EGM coin-in fell by 7 percent yearly, to PHP85 billion ($1.45 billion), while EGM GGR fell by 13 percent yearly, to PHP4.5 billion ($76.7 million).

Solaire North generated mass table drop of PHP6.4 billion during the quarter ($109.06 million), while mass table GGR totaled PHP1.6 billion ($27.26 million). EGM coin-in totaled PHP30.2 billion ($514.6 million) with EGM GGR amounting to PHP2.1 billion ($35.78 million).

Korean operations

During the quarter, the group’s operations in South Korea, at Jeju Sun Resort & Casino saw a GGR loss of PHP8 million ($136,300), reversing a gain of PHP14.7 million ($250,400) in the same quarter of last year. The group did record an increase in non-gaming revenue, up 21 percent yearly, to PHP121.9 million ($2.07 million).

Bloomberry Resorts, Jeju Sun — _{Jeju Sun Resort & Casino}

The Korean operation consists of 36 tables and 20 electronic gaming machines over a 2,000-square-meter gaming space. The hotel has 202 rooms in total. The group notes, however, that since its reopening after COVID, the property ‘continues to operate with limited gaming capacity, full hotel operations and two restaurants’.

Other investments

In its results announcement, the group noted its attempted investment in the Emerald Bay project, by PH Resorts, noting that it was terminated due to ‘adverse due diligence findings and regulatory actions’. Bloomberry notes that ‘the parties agreed that the PHP1.0 billion deposit made under the Term Sheet shall be returned to Bloomberry before the end of 2024’.

The group is also planning to develop an integrated resort and entertainment complex ‘with a world-class casino, hotel, golf course, commercial, residential and mixed-use development’ in Paniman, having agreed in May of 2022.

As of September 30^th, the group had purchased 220 land lots with a total area of 1.8 million square meters.

The group notes that ‘the development timeline for this project is yet to be finalized’.

Good morning. Results continue to flood in, with updates from Aristocrat, Light & Wonder and IGT all coming in at once. Meanwhile, in Macau, SJM has reported a nearly 30 percent increase in net gaming revenue, with play in Cotai performing well. Also, the Philippine President has assured that there are no further legislative changes needed, assuaging that his Executive Order is enough to reign in the offshore gaming industry. Looking at gambling harm, new research by the University of Queensland has found concerning practices by Facebook regarding gambling advertising.

What you need to know

Research uncovered troubling practices by Facebook in how it targets Australian users who may be at risk of harm from gambling advertising.
SJM posts strong 3Q24 with net gaming revenue up 29 percent yearly as punters continue to boost play in Cotai.
Philippine President Ferdinand Marcos: there is no necessity for new legislation to prohibit POGOs aside from his recent Executive Order.

On the radar

Aristocrat profit up 17% in FY24, with strong growth in North America/Asia.
Light & Wonder growth driven by upticks in revenue across all segments in 3Q24.
IGT sees a slight drop in revenue in 3Q24, operating income down by a third.
Aristocrat sells Plarium mobile gaming business to MTG for up to $820M.
Director exodus leaves Andrew Lo as LET Group’s sole board member.
Gaming Innovation Group signs first contract in Asia with Bloomberry Resorts.
Seaport: potential for Galaxy Entertainment to boost equity returns and dividends.

AGB Intelligence

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Research finds troubling practices by Facebook

A new study has identified troubling practices by Facebook in regards to how it targets Australians who may be vulnerable to gambling advertisements. In particular, user information of vulnerable individuals was found to have been shared with companies, encouraging their engagement with activities that they may have otherwise been trying to avoid. This comes as Australia further moves to ban gambling adverts amongst its push to reduce gambling harm.

Corporate Spotlight

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Industry Updates

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Research reveals Facebook’s targeting of vulnerable Australian users with alcohol and gambling ads

Nelson Moura

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November 12, 2024

0

Research reveals Facebook’s targeting of vulnerable Australian users with alcohol and gambling ads

A study released by the University of Queensland has uncovered troubling practices by Facebook in how it targets Australian users who may be at risk of harm from alcohol and gambling advertising.

The research introduced an innovative mobile app that allows participants to capture and share data on the ads directed at them on the platform.

This pilot study utilized a novel digital data donation method to collect ads that would typically remain hidden from public view, offering insights into the digital advertising targeting practices of alcohol, gambling, and social media companies.

The findings reveal that Facebook tagged 10 Australian participants with 89 different interests related to alcohol and gambling. The research was funded by VicHealth and the Foundation for Alcohol Research and Education (Fare).

This targeting was facilitated by data shared from 201 alcohol companies and 63 gambling companies, which provided Facebook with insights into the individuals involved in the study.

Collectively, 264 alcohol and gambling companies uploaded data about these participants to Facebook’s marketing algorithm.

Gambling disorder in Australia, NZ causes severe impact on mental health: Study

Among the participants, one individual was identified with 25 alcohol-related advertising interests and had data shared by 123 alcohol companies. Another participant, who has struggled with gambling issues, was tagged with 41 gambling-related interests, receiving data from 52 gambling companies.

Notably, one participant who has been attempting to reduce her alcohol consumption over the past decade had her information shared by 95 alcohol companies.

Participants expressed frustration over how alcohol and gambling companies undermine their efforts to reduce their consumption. Many felt that these companies were working against their attempts to limit their drinking and gambling, particularly as they were profiled and targeted with ads for harmful products.

For example, one participant reported being bombarded by gambling ads, often seeing them in rapid succession, while another described how ads tailored to her social activities served as constant reminders to drink.

_{An example included in the study of some gambling ads shown on the Facebook wall of one of the study participants}

Dr. Giselle Newton, the Chief Investigator of the study, emphasized the “report is just the tip of the iceberg” regarding how alcohol and gambling companies gather and exploit personal data to “market their harmful products”.

“Individuals trying to limit their alcohol use or gambling are often overwhelmed by targeted advertising, making it difficult to escape these promotions on platforms like Facebook”, she stated.

Participants were particularly alarmed to learn that their preferences, behaviors, and browsing history could be used to target them with alcohol and gambling advertising at a high frequency. The study noted that individuals had been targeted by over 34,346 advertisers, highlighting the pervasive nature of this marketing.

Oliver, a participant in the study, expressed his frustration with the barrage of alcohol ads on Facebook.

“It’s everywhere, and it’s not just billboards; it follows me into my home through my phone. Even when I’m browsing Facebook Marketplace, I’m bombarded with these ads…The fact that I can’t opt out of these ads is incredibly frustrating.”

Martin Thomas, CEO at Alliance for Gambling Reform — _{Martin Thomas, CEO of Alliance for Gambling Reform}

The Australian government has looked to enact reforms to betting advertising aimed at reducing problem gambling, after calls from multiple civil and political groups.

Martin Thomas, CEO of the Alliance for Gambling Reform (AGR), stated that the report highlights the predatory marketing practices of gambling companies and the role Facebook plays in enabling them.

“Australians expect the Federal Government to take stronger action to protect those at risk from constant exposure to ads for harmful products”, notes the report’s public announcement.

Caterina Giorgi - Chief Executive Officer at Foundation for Alcohol Research and Education — _{Caterina Giorgi – CEO of the Foundation for Alcohol Research and Education}

Meanwhile, Caterina Giorgi, CEO of the Foundation for Alcohol Research and Education (FARE), called for urgent reform, emphasizing that individuals should not be targeted for advertising based on their vulnerabilities.

“It’s disturbing to see how alcohol and gambling companies exploit those who are most susceptible to harm”, she remarked. “We urge the Federal Government to implement protective measures that prioritize the health and well-being of families and communities over corporate interests.”

The study’s participants expressed the need for better measures to prevent them from being targeted with alcohol and gambling ads online. They desire more control over the digital advertising they receive, particularly the ability to opt out of and permanently block harmful advertising. However, they feel that social media platforms will not take these steps without government intervention.

Macau gaming operator Galaxy Entertainment Group (GEG), despite being one of the few debt-free casino companies in Macau, has significant potential to enhance shareholder returns by strategically incorporating low-cost debt into its capital structure, according to Vitaly Umansky, senior analyst at Seaport Research Partners.

This could substantially increase equity returns, especially as operating cash flow improves in the coming years. The company’s current debt-free status provides ample capacity to take on debt while maintaining a solid investment-grade credit rating, which could further boost capital returns to shareholders.

Leveraging debt could also lead to a notable increase in dividends, delivering more value to investors. While Galaxy has already demonstrated its commitment to returning capital, with a HK$0.50 ($0.064) dividend in October and an additional special HK$0.30 ($0.039) dividend earlier this year, the real game-changer may lie in expanding these returns further through debt integration. The potential for rising dividends over the next few years, as the company’s cash flow strengthens, is substantial.

Leadership transition

The passing of Lui Che Woo, the founder of Galaxy Entertainment, at 95, has raised questions about the company’s future. However, the company has reassured investors that its operations and strategy will not be disrupted. In fact, Lui Che Woo’s son, Francis Lui, who has effectively been managing the company as de facto CEO, is set to officially assume the role of Chairman.

Francis Lui, Galaxy Entertainment Group — Francis Lui, CEO, Galaxy Entertainment Group

This leadership transition is expected to be seamless, with no anticipated changes in the company’s strategy or day-to-day operations.

‘Francis Lui has effectively been the CEO of the company (in form, if not in title),’ stated Umansky, emphasizing that the continuity of leadership will ensure the company’s steady course.

Lui’s leadership has been central to Galaxy’s evolution into a key player in the Asian casino industry. With his transition to Chairman, the company is expected to maintain its solid growth trajectory.

Galaxy Entertainment, Macau, Capella Hotel

Strong position in Macau

Galaxy Entertainment remains one of the dominant players in Macau, holding the position of the second-largest casino operator in the region.

Analyst Umansky notes that the company has made significant strides in adapting to changing market conditions, particularly with the decline of the VIP sector, which had previously been a major revenue driver.

In response to this shift, Galaxy has successfully pivoted its focus to the premium mass and mass market segments, where it continues to maintain a competitive edge. Its large-scale entertainment offerings, service excellence, and diverse product portfolio help differentiate Galaxy from other operators in the region. A key element of this success has been the company’s robust event programming, including major music performances, which have significantly boosted business during peak periods.

Looking ahead, Galaxy has well-positioned plans for further expansion. The Capella luxury resort at Galaxy Macau, slated to open in mid-2025, will enhance the company’s premium positioning in the market. With 94 villas and suites, alongside extensive amenities and gaming offerings, Capella is expected to drive market share gains in late 2025 and into 2026.

This will be followed by the opening of Galaxy Macau Phase 4 in 2027, which will further support the company’s expansion and share growth in the region.

For 3Q24, SJM recorded net gaming revenue of HK$6.99 billion ($899 million), a 29 percent increase from HK$5.41 billion ($696 million) in the same period last year. This surge in revenue reflects the continued recovery of Macau’s gaming market, supported by a steady influx of visitors and an overall boost in gaming activity.

The company also reported a notable improvement in its EBITDA. Adjusted EBITDA for 3Q24 reached HK$1.04 billion ($133 million), up from HK$566 million ($73 million) in 3Q23. This represents an 83 percent year-on-year increase, signaling enhanced operational efficiency and strong cost management.

SJM’s adjusted EBITDA margin also saw significant improvement, rising to 13.8 percent in 3Q24 from 9.6 percent in the same quarter last year. This increase reflects the operator’s efforts to boost profitability through cost optimization and better revenue generation.

For the first nine months of 2024, the Group’s adjusted EBITDA margin was 13 percent, compared to 6.7 percent for the same period in 2023, further highlighting the company’s positive trajectory.

Additionally, SJM recorded a profit attributable to the owners of the company in 3Q24 of HK$101 million ($13 million), a turnaround from a loss of HK$410 million in 3Q23.

Despite this positive result, the Group posted a loss attributable to owners of HK$61 million ($7.8 million) for the nine months ending 30th September 2024, a marked improvement from the loss of HK$1.67 billion ($215 million) during the same period in 2023.

Grand Lisboa Palace

In 3Q24, the operator’s flagship integrated resort, Grand Lisboa Palace, posted robust gross revenue of HK$1.78 billion ($228 million), driven by a significant increase in both the gaming and non-gaming sectors.

GGR reached HK$1.42 billion ($183 million), a notable rise from HK$783 million ($101 million) in the same period last year. Non-gaming revenue also saw a solid increase, rising to HK$354 million ($45.5 million) from HK$301 million ($38.7 million) in 3Q23. This growth reflects the strong recovery and ongoing appeal of the resort’s offerings.

The resort’s adjusted property EBITDA turned positive, reaching HK$165 million ($21 million) in 3Q24, a significant improvement from the negative HK$27 million ($3.5 million) posted in 3Q23. This marks a clear sign of improved operational efficiency and profitability.

For the nine months ending 30th September 2024, Grand Lisboa Palace achieved gross revenue of HK$4.73 billion ($608 million), with HK$3.75 billion ($482 million) from gaming and HK$985 million ($127 million) from non-gaming. In comparison, during the first nine months of 2023, gross gaming revenue (GGR) was HK$1.82 billion ($234 million), and non-gaming revenue was HK$697 million ($90 million).

Grand Lisboa Hotel

Grand Lisboa reported gross revenue of HK$2.02 billion ($257 million), driven primarily by strong gaming performance in the period. GGR reached HK$1.94 billion ($249 million), a significant increase from HK$1.47 billion ($188 million) in 3Q23. Non-gaming revenue totaled HK$74 million ($9.4 million), slightly lower than the HK$81 million ($10.4 million) recorded in the same period last year.

The property’s adjusted property EBITDA for the quarter was HK$545 million ($69.5 million), reflecting a solid increase from HK$373 million ($47.6 million) in 3Q23, highlighting improved operational performance.

For the nine-month period, Grand Lisboa’s gross revenue amounted to HK$5.82 billion ($740 million), with HK$5.60 billion ($715 million) coming from gaming and HK$214 million ($27.3 million) from non-gaming. This marked a notable rise compared to the first nine months of 2023, when GGR was HK$3.73 billion ($476 million) and non-gaming revenue was HK$218 million ($28 million).

Marcos clarified that his EO signed on November 5th, already encompasses not only POGOs, internet gaming licensees (IGLs) but also illegal offshore gaming operations, as well as any license applications and renewals related to these activities, effectively addressing concerns surrounding these activities.

He reiterated that casinos and integrated resorts operated by the Philippine Amusement and Gaming Corporation (PAGCOR) are not permitted to engage in offshore gaming.

“There is just no way because it’s the nature of the operation that we are banning. It’s not because it’s under PAGCOR or not,” Marcos stated. “As long as it’s POGO or has a similar license, it’s banned.”

The President’s comments come in response to concerns raised by Senator Risa Hontiveros, who pointed out potential loopholes in the executive order that could allow POGOs to continue operations through PAGCOR-operated casinos or licensed establishments with junket agreements.