Jia Kang, the former head of the Chinese Academy of Fiscal Studies, predicts “stable development for Macau’s gambling industry, even though Beijing is preparing a legislative amendment to stop capital flight for gambling.
Chinese advisor predicts stability in Macau despite fight against overseas gambling (Macau Business)
Good morning.
The week starts with a boom as the Australian Transaction Reports and Analysis Centre (AUSTRAC) delivers a formal notice to Crown Resorts that it has potentially identified AML non-compliance. This ahead of what is expected to be a contentious virtual Annual General Meeting at which investors may make their displeasure clear. In a different tempo, we profile Indian online fantasy start-up Dream 11 which has quietly grown into one of the country’s biggest online gaming companies, now worth $2.5B.
AUSTRAC delivers notice to Crown Resorts on possible AML breaches
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Markets moving with Universal boosting notes, Emperor issuing profit warning, and Paradise’s bond offer
Jeju wants financial aid for struggling casinos while Kangwon Land’s commitment to PG is questioned
Yokohama mayor says she would respect IR referendum result
SkyCity doesn’t expect normality until 2022
Shambala opens with cash draw, entertainment show
Phu Quoc island kicks of tourism promotion campaign
Widus Group delays property expansion under Covid-19 impact
Manila property sector expects continuing POGO exodus
Airfares soar on Hong Kong/Singapore bubble news while Goa aims to become one of the safest tourism destinations
Adelson top donor to Trump’s reelection efforts
MGM ranks 107 in world’s best employers list
Online gambling suspect slips Malaysia police custody
Fitch Ratings has joined rival agency Standard & Poor’s in expressing concern over the speed of recovery for Genting Bhd, citing a lag in Singapore, which is reliant on international tourism arrivals. The agency, which downgraded the long-term issuer default rating of Genting to BBB from BBB+, said it now doesn’t expect the group’s consolidated revenue and EBITDA to return to pre-pandemic levels until at least the end of 2022. It had previously expected a recovery next year. Its sister resort in Malaysia is expected to fare better with help from the local market.
MOVERS & SHAKERS
Indian online fantasy start-up Dream 11 has quietly grown into one of the country’s biggest online gaming companies. The company was founded by University of Pennsylvania graduate Harsh Jain along with his friend Bhavit Sheth in 2008, initially offering Freemium Fantasy Cricket. Today, the company commands 90% of the Indian fantasy sports market with more than 90 million users – the highest number of registered users of any sports gaming platform in India. 
FIRST WORD
As the new week dawns, our attention remains focused on Crown Resorts, which holds its Annual General Meeting after yet another week of devastating testimony at the New South Wales Independent Liquor and Gaming Authority (ILGA) probity inquiry, as well as the AUSTRAC investigation on possible AML breaches that was revealed this morning.
Transact to display at virtual G2E
TransAct virtually showcasing their premium gaming products, which include the Epic Edge casino printer and the Epicentral 4.0 promotional solution at G2E Las Vegas.The company will also demonstrate Epicentral Clean2Play, its newest gaming product designed to keep players safe by printing proof when slot machines have been sanitized.
Synectics recently launched a range of new security features in its advanced Synergy software to deliver unparalleled protection for customers. Sitting at the heart of casino control rooms around the globe, the Synergy command and control platform powers security solutions for the most demanding gaming environments.
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Fitch Ratings has joined rival agency Standard & Poor’s in expressing concern over the speed of recovery for Genting Bhd, citing a lag in Singapore, which is reliant on international tourism arrivals.
Fitch, which downgraded the long-term issuer default rating of Genting to BBB from BBB+, said it now doesn’t expect the group’s consolidated revenue and EBITDA to return to pre-pandemic levels until at least the end of 2022. It had previously expected a recovery next year.
The ratings agency is forecasting consolidated EBITDA to fall by 80 percent to MYR1.5 billion in 2020, before gradually improving to MYR4.2 billion in 2021 and MYR7.4 billion in 2022.
The company operates the Resorts World Sentosa property in Singapore. Fitch is now predicting that the Genting Singapore unit won’t recover on an EBITDA basis before 2023, longer than its prior forecast for 2022.
S&P stopped short of downgrading Genting, but changed its rating outlook from stable to negative due to Singapore’s lack of visitor traffic. It estimated that the company gets 75 to 80 percent of its visitation from international markets.
On Thursday, Hong Kong and Singapore announced they would attempt to establish a travel bubble, although that may not kick in for several weeks and leaves little left of 2020 for any meaningful return to travel. Restrictions on two of Singapore’s biggest source markets, Malaysia and Indonesia, remain in place.
Both of the ratings agencies are more upbeat about prospects in Malaysia, where sister company Genting Malaysia has been investing in a long-term tourism plan to improve its facilities, adding substantial non-gaming attractions. The country’s local muslim population is not allowed to gamble, but Resorts World Genting still receives strong local visitation. This, however, won’t be enough to offset the slowdowns elsewhere, Fitch notes.
There has also been a resurgence of cases around Kuala Lumpur and several zones have had mobility restrictions re-imposed. For now, Resorts World Genting says it’s business as usual, though a second lockdown can’t be ruled out.
The pandemic has also hit at a time when the Genting group is involved in a number of capital intensive projects, including expansion in Singapore, the Genting Integrated Tourism Project in Malaysia and the completion of Resorts World Las Vegas.
That resort is expected to open in summer of 2021.
Indian online fantasy start-up Dream 11 has quietly grown into one of the country’s biggest online gaming companies.
The company was founded by University of Pennsylvania graduate Harsh Jain along with his friend Bhavit Sheth in 2008, initially offering Freemium Fantasy Cricket.
Today, the company commands 90% of the Indian fantasy sports market with more than 90 million users – the highest number of registered users of any sports gaming platform in India.
It was estimated that the number of fantasy sports fans in India will reach 100 million by the end of 2020. However, Covid-19’s impact on traditional sports could boost this number even further past estimates.
The company’s phenomenal growth and opportunities have not been missed by the financial community.
The company successfully completed its Series A funding in 2015 from India-based Kalaari Capital. In 2017, the company saw additional funding from Kalaari Capital and Multiples Alternate Asset Management Private. This was followed by a high-profile move from China’s Tencent Holdings, investing $100 million in the fantasy sports company in 2018. The company also saw a capital injection from Steadview Capital in 2019.
Last month, Dream Sports, the parent company of Dream 11, secured fresh funding of $225 million from Tiger Global Management, TPG Tech Adjacencies (TTAD), ChrysCapital, and Footpath Ventures. Dream 11 is currently valued at approximately $2.5 billion.
Any discerning investor will tell you that much of Dream 11’s success can be attributed to India’s blanket ban on sports betting.
However, when asked whether Dream 11 would ever consider moving into the real-money sports betting space should the opportunity arise, Jain told Cricket Prediction in an interview that they’d rather continue their focus on growing the fantasy sports in India.
Dream 11’s U.S. fantasy sports counterparts, including Fanduel and DraftKings did not share the same line of thinking, however, with both companies taking a keen interest in the opportunities brought by the regulation of sports betting in the U.S.
The company continues to move from strength to strength. Just this year, Dream 11 won the title sponsorship rights for the 2020 edition of the Indian Premier League for $30.3 million.
Dream 11 is also the Official Fantasy Game partner of International Cricket Council (ICC), Pro Kabaddi League (PKL), Hero Indian Super League (ISL), National Basketball Association (NBA), Hero Caribbean Premier League (CPL), International Hockey Federation (FIH) and Big Bash League (BBL).
According to research, more than 300 million Indians are expected to watch sports on their smartphones and online, and this number is set to continue to grow with faster internet and increasing smartphone penetration.
Thus, Dream 11’s future continued success will depend on whether it can continue to keep a leg up on its 60-plus competitors.
Universal Entertainment, which controls the Okada Manila IR in the Philippines, has announced to JASDAQ that it will increase its planned notes offer from US$100 million to US$135 million.
Notes Issued in 2018, and the Proposed Issuance of Additional Notes (JASDAQ filing)
Yokohama Mayor Fumiko Hayashi has, for the very first time, acknowledged that the people of her city might actually have a voice in whether or not to build a major IR along the coastline.
Asked on Friday about her plans, the mayor reiterated that she has no intention to hold a referendum on IR development, nor would she be guided by public opinion, but that, “if a referendum is held and there is much opposition to an IR, I would like to respect the results.”
During her reelection campaign in the summer of 2017, Hayashi claimed to be a “blank slate” on the question of IR development, but last year she unveiled her strong support for the initiative, declaring it to be a vital necessity for the economic development of the community.
Public opinion throughout most of Japan has been negative about casino legalization, but opposition in Yokohama has been particularly intense, with polls showing 2-to-1, and sometimes even 3-to-1, opposition to the scheme.
Currently, there are two separate citizen signature-gathering campaigns aiming to defeat the IR development initiative. One, if it gathers sufficient support, would require the municipal government to hold a popular referendum on the IR (about which Hayashi was responding to in her Friday comments) and the other is seeking the recall of the mayor, replacing her with a candidate who opposes casino legalization.
In spite of this intense local opposition, Hayashi has pushed forward, many believe based upon the counsel of her main political patron, former Chief Cabinet Secretary and current Prime Minister Yoshihide Suga.
Mayor Hayashi’s more conciliatory stance toward the local opposition was likely provoked by the nine-month delay in the national IR development timeline. Under the previous schedule, she would have been able to submit Yokohama’s IR licensing application to the central government before facing the voters next summer, thus presenting them with a fait accompli.
However, this option has now been foreclosed, meaning that Hayashi is required to face her angry voters before the question of local IR development is decided. Her comments about her willingness to accept the popular verdict may therefore be less about a change of heart on the need for democratic input and more about lowering the temperature of the confrontation and trying to ease public passions.
At any rate, whether she likes it or not, she will now be required to defeat the anti-casino movement and its champions next year in at least one direct contest before Yokohama’s IR licensing application can be submitted.
As the new week dawns, our attention remains focused on Crown Resorts, which holds its Annual General Meeting after yet another week of devastating testimony at the New South Wales Independent Liquor and Gaming Authority (ILGA) probity inquiry, as well as the AUSTRAC investigation on possible AML breaches that was revealed this morning.
Last week it was the turn of a number of members of the board of directors to be grilled, and few of them emerged from the hearings unscathed. In particular, the impression emerged that some of the so-called independent directors may not have been very independent after all, tied by close bonds of loyalty to James Packer and the Packer clan.
We expected, at the beginning of last week, to see some kind of action by the board to try to distance themselves from the now toxic Packer and to engage in some form of damage control. The only visible action, however, was a report that Packer’s flow of confidential information has now been cut off.
It needs to be underlined that even as the months have passed since the Australian news media made its allegations against Crown Resorts regarding its poor management of junkets bringing VIPs from China, the company response was only to aggressively deny any wrongdoing. The board did not launch any inquiry of its own to look into the matter.
Questioned about this inaction on Friday, Board Chair Helen Coonan, a former New South Wales senator, indicated that the decision not to review the firm’s governance failures was made on the basis of legal advice that it might weaken the firm’s defense in a shareholders’ class action. At this point, that hardly seems a convincing demonstration of good leadership.
Crown Resorts AGM, which will be a virtual meeting, is scheduled for this Thursday, and observers will be keenly watching the developments.
Highlighted most clearly by the news media is that three board directors–Guy Jalland, Jane Halton, and John Horvath–are facing reelection, and some shareholders have already indicated that they intend to use this opportunity to begin sweeping out some of the firm’s current leadership.
In this connection, there will also be a focus on whether or not James Packer, with his 36 percent stake in the firm, will attempt to protect his allies, and how aggressive he might be in this regard, now that he has been so thoroughly discredited in the public eye.
Some observers suggest that US private equity and investments giant Blackstone may be the swing vote on this occasion.
At any rate, this week will no doubt be a fateful one for Crown Resorts as the current board will have its last opportunity to demonstrate that it can reform from within. If they simply try to circle the wagons once again, the consequences could be grave.
Australian Transaction Reports and Analysis Centre (AUSTRAC) has delivered formal notice to Crown Resorts that it has identified potential non-compliance at the firm with its responsibilities in relation to anti-money laundering rules.
AUSTRAC Enforcement Investigation (ASX filing)
Manila’s property sector is bracing for the continuing exodus of Philippine Offshore Gaming Operators (POGOs) and their service providers as almost 300,000 square meters, or 17 percent, of total office space will be vacant by year-end.
POGO exodus seen by yearend (PhilStar)
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