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November 19, 2010

Singapore Enters The Global Casino Club

Filed under: Casino — Tags: , — OCE News @ 12:00 am

The casino industry generates hefty volumes of revenue globally, and is consistently growing stronger, particularly as Asian countries are becoming more affluent. Although casinos are illegal in some nations such as the Arab world and India, they are partially legalized in nations such as Singapore. In fact, the country has announced its plans for opening a range of casinos (after the two major casino resorts) to cash in on the growth of gambling all across Asia.

This declaration reflects a change in the Singaporean culture. While casinos and gambling were once extensively frowned upon, today they are growing, both in revenues and social acceptability. As the first ever Singaporean casino, Resorts World Sentosa, had a grand opening this year in January, the whole of Asia watched in complete shock. Then, only a few months ago, Singapore opened Marina Bay Sands, its second casino. The latter is known to be the world’s second costliest casino, built at an enormous cost of more than five billion dollars.

Although Las Vegas is still one of the favorite destinations for gambling, gamblers are heading to other places like UK, and now Singapore is also on the list. Additionally, in terms of physical location it is precisely at the right place, with the gambling industry seeing the Far East as the major growth area.

Singapore And Gambling

As gambling remains illegitimate in mainland China, the risk-hungry punters travel overseas to satisfy their quest. Presently, Chinese people who want to gamble visit places like Macau, which has been a gambling magnet for long. But Singapore is definitely thinking of taking a share of this quite lucrative clientele from Macau. Add casinos to countries like the Philippines, Malaysia, and Cambodia, and the continents legal gambling industry is estimated at about dollar fourteen billion a year.

But the big question is, will this strait-laced state become the centre of entertainment in Asia?

Singapore’s government seems to be resolute in limiting the raucous entertainment to foreigners. The citizens have to pay a heavy amount of Singaporean dollar100 to enter the casino. And there’s been no alteration to the country’s strict drug laws.

However, if the government is so concerned about the cons of gambling among its own citizens, why has it entered the casino market?

The reason behind it is that every decade the officials seem to think hard and long and come up with new ways to give the tourists a brand new cause to visit Singapore. These casinos seem to be the latest reason. Moreover, as the Asian economies have been hard hit by recession, Singapore’s ten billion offering is estimated to revive the economic growth. In fact, with a thirteen percent increase in the country’s first-quarter GDP, gambling may already be paying off.

As Singapore still awaits results from its incursion into unknown waters, one thing is for sure. With cautious planning, the government tries very hard to retain the social ethnicity and order it has earned a reputation for. Although it’s still very early to exactly assess the social and monetary impact of the resorts, for the time being all bets are on success — at least financially — for Singapore.

November 17, 2010

Sands Corp’s Q3 Results Outperform The Street!

Filed under: Casino — Tags: , — OCE News @ 12:00 am

Las Vegas Sands Corp., a leading luxury resort and casino operator, has outperformed market expectations with its record revenue earnings. Sands Corp. owns two of the five-diamond hotels in the Las Vegas Strip in Nevada – The Venetian and The Palazzo. In the last decade, it has also developed luxury properties in Macau (China), Marina Bay (Singapore), and Bethlehem (Pennsylvania, the United States) with gaming and entertainment facilities.

Chief Contributors To Growth

Ignoring the state of recovery the United States has been in for the last couple of years, this Fortune 500 Company managed to show off a remarkable record. It must be acknowledged that the US share in the business was just 15 percent; China and Singapore largely contributed to the stupendous growth. Macau’s terrific growth rate, in particular, along with the new Marina Bay resort in Singapore contributed to the numbers.

According to the Chairman Sheldon Adelson’s statements, the net income for the 3rd quarter was $1.91 billion, 67 percent up, as compared to the last year’s $1.14 billion. Sands China Ltd. contributed with $1.08 billion, 28 percent up, as compared to the last year, and Marina Bay with $485.9 million net income. Las Vegas Sands Corp’s share was $290.7 million.

Adjusted property EBITDA shot up 137 percent and amounted to $645.2 million. Macau registered a record $334.6 million as compared to Las Vegas’ $58.3 million adjusted property EBITDA. Marina Bay Sands, Singapore, contributed with $241.6 million, the highest ever quarterly revenue from a single property in the history of the company. This is also its first full quarter of operations.

Overall adjusted property EBITDA margins increased to 33.8 percent from 23.9 percent in Q3 of 2009. Marina Bay Sands, Singapore, had a margin of 49.7 percent for the quarter while Sands Macao’s adjusted EBITDA margin was 31.3 percent.

The company earned 21 cents per share as compared to the last year’s loss of 19 cents a share.

The market showed its thumping approval as the share prices of NYSE-listed Sands jumped 10 percent which amounted to $45.25 after the press release. Sands China also rose by 6.4 percent and amounted to HK$15.94.

Increase in gaming volumes, hotel visitation and occupancy, and total overall operational efficiency have been credited as the drivers of growth.

It is truly a telling sign, as it was only two years ago that the majority shareholder and billionaire Sheldon Adelson lent money to the company to overcome the looming bankruptcy fears. With banks and other financial institutions crashing all around them, casinos found lenders hard to come by. Sands Corp. has now put to rest all such fears and has risen from under those towering shadows to stand tall. Its operational efficiency has surged.

What Lies Ahead?

Sands Corp. has just signed a ten-year deal with InterContinental Hotel Groups to link the casinos and resorts company to the hotels giant. The move is expected to provide access to 52 million members, mentioned in Intercontinental’s database, to Sands Corp. On the other hand, Intercontinental will be able to market their hotel rooms to 2 million Venetian and Palazzo casino’s or resort’s customers. So, there will be much scope for increase in room occupancy and rates, and acquisition of new customers for both companies.

With casino companies shying away from Las Vegas, and Macau becoming the largest hub for casino and gaming activities with a 60 percent growth in gambling revenues, the future clearly lies in Asia. Expansions in Marina Bay and Macau are what will steer the road ahead for Sands Corp.

November 15, 2010

Harrah’s Entertainment Gambles With Its IPO Plans

Filed under: Casino — Tags: , — OCE News @ 12:00 am

The largest gaming company in the world, Harrah’s entertainment is making news again. It is trying to tap public markets with an initial public offering and is hoping to raise a whopping $575 million. It plans to use this money for its planned projects in Las Vegas and Ohio. It owns and operates over 50 casinos, hotels, and 7 golf courses under different brand names like Harrah’s, Bally’s, Caesars, Horseshoe, and Rio. Harrah’s taken private in January 2008 by Hamlet Holdings (Apollo Management and Texas Pacific Group), is eyeing on new opportunities in US gambling market.

The company has filed documents with the US Securities and Exchange Commission of its plan of offering public shares. It has listed several pending projects that it hopes to complete using the raised money. Nevertheless, it has not disclosed the amount of stock to be sold or the expected pricing of the stock.

Harrah’s Entertainment had dropped its dream projects due to financial crunch. However, the mega projects are kicking off again with the IPO plan. The company in its regulatory filing stated that it plans to finish its 660-room Octavius Tower at Caesars Las Vegas, develop the LINQ retail and entertainment area next to the Flamingo on the Las Vegas Strip, and invest in the development of two Ohio casinos jointly with Rock Gaming. Without disclosing the details, it also hinted at other possibilities of using the money raised for another potential casino management and partial ownership opportunity.

It can be recalled here that Apollo Management and TPG acquired Harrah’s when the market was at its peak. With this, the company assumed an enormous $20 billion debt. Recession gripped America just as the deal was done. The gambling industry was hit badly and Harrah’s is struggling ever since to make payments on that debt. Harrah’s cut $500 million in costs and also allowed hedge fund Paulson &Co. to take on $710 million in Harrah’s debt for about $470 million. It is believed to have extended most debt maturities until 2015. Even with many such efforts, Harrah’s remains the most indebted of all the major players of the gaming industry.

Harrah’s, having played a major role that pushed US Congress to allow Internet gambling is trying to improve its financials with the IPO plan. But even after the IPO, Harrah’s will still owe $20 billion as debt. Its lack of presence in Macau, the global hot spot for casinos and resorts, and the ever-increasing competition in the industry poses problems. The investors will also watch its ability to leverage its World Series of Poker on-line very carefully.

Harrah’s SEC filing is an indication that casino industry is getting back on its track. Markets are showing signs of recovery with Fitch ratings giving a positive outlook for MGM. Las Vegas Sands Corporation and Wynn Resorts Limited beat EPS expectations in the June quarter. However, Boyd Gaming Corporation and a few other companies reported EPS weaker than expected. All these suggest the investors to be cautious with the IPO.

Harrah’s probably hopes to recoup more by staying in the industry. As the slump in Las Vegas eases and casino securities rally, Harrah’s IPO is a bold move. The success of the IPO depends on the stability of the market and the ability of Harrah’s entertainment to woo the wary investors and persuade them that their IPO is worth the gamble.

November 13, 2010

Criticism Haunts New York City’s First

Filed under: Casino — Tags: — OCE News @ 12:00 am

Casinos in the United States are centered in Las Vegas, Atlantic City and Chicago. There was recent news that the first ever casino of New York City is to open soon – maybe even as early as 2011. This had caused a big flurry among the game loving people of the City. Till now the New York City’s gambling was mostly carried out on cruise ships that dock near the city. Or else people would drive out to other parts of the state where there are casinos. Hence the anticipation had built up when the bid was called for.

Authorization Of New York City’s First

There were five odd companies which participated in the bid for the casino. Most of these were race track owners because in New York state most casinos are placed along with the race tracks. The first casino of New York City is supposed to have been opened at Aqueduct Racetrack in Queens. Aqueduct Entertainment won the bid after the deciding committee voted. The casino was going to be basically a slot machines casino and they were planning to have more than 4000 slot machines.

Criticism Regarding Aqueduct Racetrack Casino

A very critical report of about 300 pages was released by the State Inspector General in October 2010 which has been very damaging for the Aqueduct Casino. The report criticizes many Democrat senators too and especially points fingers at State Senator John Sampson. According to the report Sampson manipulated the selection of who is to build the City’s first casino. The report states that Aqueduct marshaled funds to get the bid in their favor and as such the entire process of selection of the best bidder was tainted. The Inspector General also said that based on the findings of the report he was referring the finding to both federal and state prosecutors to take necessary action. However chief accused Senator Sampson did not directly make any statements to contradict the accusation. Instead he talked of the selection process to lack proper structure and process indicating that the reason for the problematic selection is not any favoritism. The report has also stated that the Governor and the State Lottery office considered Aqueduct’s bid for the casino to be unacceptable. The Inspector General accused the senators involved to have received donations for their campaign from Aqueduct. It was basically a story of corruption and favoritism.

In short, the entire activity has blown up in the faces of the democrats and has given ample ammunition to the republicans to wage a fight. Whether a casino will finally come up in New York City or not is thus debatable until this issue is settled. The opening of such a casino was supposed to have brought into the state treasury at least Dollars 1.5 million in funds on a daily basis. The casino would have also pumped a great deal of money into the horserace business. Unfortunately, the allegations mean all this will have to wait. Meanwhile the city’s people still can have the casino experience by visiting the many cruise ship docks there which have casinos onboard.

November 11, 2010

Better Bet In Online Gambling

Filed under: Casino — Tags: , — OCE News @ 12:00 am

Casinos have been in existence for a long time. They are said to have originated from Europe and then spread to all parts of the world. Today they have reached the World Wide Web as well. Many casinos owners now feel that online casinos are more profitable than the on-land ones.

The Off-Liners See The Point

Most of the big casinos in the United States opposed the idea of online casinos and considered them as a big threat to their business. Besides that, online gambling is still illegal in the US. However, recently, in October 2010, some of these high end casinos like MGM Resorts, Wynn Resorts and Harrah’s Entertainments have decided to come together and work on a proposal that would request the Congress to legalize online gambling. This was in lieu of a statement released by the American Gaming Association which stated that online casinos could also be properly regulated. The Association has also mentioned that the details of the Internet gambling regulatory rules are being worked out. Before all this, in July 2010, there was a congressional bill that was put forth by Democratic Representative Barney Frank, which aimed to legalize all Internet gambling. However, the bill at that time was not supported by the Gaming Association or the leading casinos. Due to this, the bill was not passed by the congressional committee.

With the air changing, there is definitely hope for the bill to pass. This would turn around the face of gambling all together. Some states, like California and Florida, have made online gambling legal within the state boundaries. But the passing of this bill in the congress would make it legal across all state boundaries. One of the major oppositions of Internet gambling comes from Nevada State which is the center for gambling in the United States. The senator of Nevada too is rethinking his stand and there is every likelihood that Nevada will be supporting online gambling.

There is speculation that if the bill is going to be passed it would be mainly legalizing online poker than the other games. A study by experts has shown that internet poker does not and will not cut the profits of off line casinos. Even if there is a cut it would be negligible. It is this study that has led to the changing of opinion in favor of Internet casinos. Another reason for the change in stand by many of the big guns in the casino industry is the fact that online gaming is a very profitable industry. Online companies like Pokerstar reel in as much as Dollar one billion in profits per year, a figure that cannot be ignored easily.

Mr. Fahrenkopf, CEO of American Gaming Association, states that the group has been studying Internet gambling for a period of two years and also studying the issues involved with it including taxation, consumer protection and security. According to him, the group will be making a presentation to the congress soon once the study is complete and all the loop holes would be closed. With that presentation and the already existing bill, there is no denying the fact that online gambling would be legalized under Federal laws.

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