Your Daily Asia Gaming eBrief: Australia a tough nut for suppliers to crack

Monday 19th of July 2021

Good morning.

Starting off the week, new updates to International Entertainment's plans to develop a new IR facility in Manila, with expectations for a property featuring 250 gaming tables and 800 five-star hotel rooms, under an agreement with PAGCOR. However the search for the suitable land for the project is still ongoing.
New entrants to the gaming machine market are facing "significant barriers" in Australia exacerbated by the pandemic, with legacy companies holding an advantage unless newcomers provide extreme discounts.
Meanwhile, analysts at J.P. Morgan predict supply chain issues to impact Aristocrat's sales in the second half of the year.
And in Japan, the MGM-Orix consortium is planning a $9.1 billion investment in its Osaka Yumeshima IR, slightly lower than the $10 billion figure estimated but still above expectations after the onset of the pandemic and increased regulatory pressure. Plans have however been pushed back, with operations only expected to commence in 2028-2030.

First, the news

Australia a tough nut for suppliers to crack
Aristocrat sales hit by supply chain issues: J.P. Morgan
Int. Entertainment signs casino operating rev share with PAGCOR
MGM-Orix consortium proposes US$9.1 billion IR for Osaka
Macau VIP baccarat continues to lose ground in 2Q21
China plans third blacklist of outbound tourist destinations
New Zealand announces first TAB board appointments
South Shore loss widens, judge to hear arguments in debt case
China health code for Macau entry revised to include data
Vaccination at Hong Kong community centers could be halted: Secretary
Judge grants request for IPI assets to be sold to settle civil lawsuits

What you need to know

Aristocrat sales hit by supply chain issues: J.P. Morgan

Demand for Aristocrat Leisure's products has been strong in Australia and New Zealand, but issues affecting global supply chains may impact sales in the second half of the 2021 fiscal year, J.P. Morgan said in a note. The analysts note that hardware such as monitors, silicon chips, light tubes and related button-decks and panelling have been the hardest hit. However, according to the firm's channel checks, this is likely to translate into stronger demand in the first half of the next fiscal year. Gaming industry contacts have said they would prefer to wait for Aristocrat's products to become available than to switch to other vendors who do have availability.

Int. Entertainment signs rev-share agreement with PAGCOR

Hong Kong-listed International Entertainment Corp is planning to develop an integrated resort in Manila featuring 250 gaming tables, 100 junket tables, 1,600 slot machines and 800 5-star luxury hotel rooms, as well as restaurants, leisure facilities and shopping arcades. The current arrangement with PAGCOR over its New Coast Hotel property will be mutually exclusive from the new contract, however International Entertainment’s subsidiary “has not yet identified suitable land to expand the hotel premises,” which will “take (a) certain extent of time”.

MGM-Orix consortium proposes US$9.1 billion IR for Osaka

MGM-Orix consortium is proposing a JPY1 trillion (US$9.1 billion) investment level for its Osaka Yumeshima IR. While this investment level is somewhat less than the US$10 billion number that had been thrown around a couple years ago by then-competitors such as Las Vegas Sands and Melco Resorts, many had feared that changing conditions in the Covid era might lead to a much lower figure. This is the first indication ever that an IR development in Japan’s first round might not have its opening in the 2020s. The new plans apparently call for opening the Osaka IR in stages.

Insights

DEEP DIVE

Australia continues to prove tough nut for suppliers to crack

Australia has more than 8,000 bars, pubs and clubs, with many licensed to offer some kind of gaming product, over and above its regulated casinos, which should on the face of it provide an interesting opportunity for global suppliers. According to figures from IBISWorld, the annual revenue generated by these premises is about $15 billion. The country is in sixth position globally in terms of slot machine installations at 192,800, despite only having a population of 25.3 million people. However, both Australia’s clubs and casino market are dominated by a handful of major players - Aristocrat Entertainment and Ainsworth - with high barriers to entrance hindering the introduction of new and innovative product choices.

Corporate Spotlight

Pragmatic Play Asia footprint set to expand

The well-known content provider in the iGaming industry— Pragmatic Play will continue to expand its footprint in emerging markets worldwide. The increasing acceptance of iGaming has resulted in a gradual shift in attitude toward regulation, with more and more markets taking an approach to deliver legislative roadmaps that will drive business in a period of hyper-growth.