Wednesday, August 17, 2022

Macau Legend sees major Laos potential, others sceptical

Macau Legend has big plans for Laos after its $42 million purchase of Savan Vegas, but the Laos market remains volatile and somewhat hostile to foreign investment.

Laos hit the headlines last year when the government put Savan Vegas out for bids having seized the resort from its foreign owners, Sanum Investments, over alleged tax liabilities. The sale generated interest from six buyers, including Macau junket promoter Iao Kun Group and casino operator Macau Legend.

The bid process was turbulent at times; Sanum Investments announced it was suing the Lao government and San Marco Capital Partners, whom the government had hired to facilitate the sale, to slow down the process.

They were unsuccessful, and in May last year the government announced Macau Legend had been selected as the winning bidder, paying $42 million to purchase the property and the rights to operate it for 50 years.

South East Asia has been ready and waiting for a large operator to make its move, says Tim Shepherd, co-founder and president of business development at Silver Heritage Group.

“I said this time last year that a major player would move into the region, and Macau Legend proved me right as they secured the gem that is Savan Vegas (now Savan Legend). I understand results are very promising and they haven’t even started building it out to their normal luxurious levels.”

Following completion of the sale in September, Macau Legend claims Savan Legend has “contributed positive EBITDA in the first few months of operation” and that in the long-term it has plans to expand the resort with a new hotel, two golf courses and additional leisure and entertainment facilities.

Before looking at Macau Legend’s plans for Laos, it is worth taking a closer look at the country’s gambling market and what opportunities it presents.

There is a regulatory framework in place, but one some suggest needs modernization. Shaun McCamley, head of Asia operations at Global Market Advisors, says for the market to grow and prosper, existing gambling laws need to be overhauled.

“The current regulations are out of date, grey and need to be completely reworked, particularly the gaming tax structures. Currently it is a flat gaming tax negotiated between the government and each operator. There are no independent audit capabilities, and the numbers casinos submit cannot be independently verified.”

Savan Legend, which is in Savannakhet Province in the south of the country and bordering Thailand, is one of just three legal casinos in Laos. The market is still quite large, and made up predominantly of Thais who cross the border specifically to play, and a few Chinese.

The market is mostly recreational, with McCamley estimating an 80/20 split between mass and VIP players, with tourist backpackers tending to steer clear of the country’s casinos.

The Laos economy has been steadily growing over recent years, driven in part by an increase in tourists entering the country. Between 2010 and 2014, the number of visitors rose from 2 million to 4.1 million, growing 16 percent each year on average.

The Laos government is seeking to capitalize on this, and has plans to further develop parts of the country to boost visitation numbers. One of the areas identified is the Savannakhet Province.

This is strengthened by China’s One Belt, One Road policy, which is driving investment into Laos and other countries in the region. Macau Legend says this will further strengthen the Laos economy, growing its gambling industry in the process.

“The investments from China have contributed and will continue to contribute to the economic development in Laos. Savan Legend is in an area the government has earmarked as part of its development strategy,” a spokesman said.

Since being handed the keys to Savan Legend back in September, Macau Legend has been busy refurbishing and re-branding the property. The resort currently has 90 gaming tables, 466 slot machines and 472 hotel rooms.

“We are currently undertaking an extensive renovation program of the re-branded Savan Resorts, which includes new hotel suites, upgraded entertainment as well as new food and beverage experiences,” the spokesman added.

By upgrading the resort, the operator hopes to draw in more customers from neighbouring countries. Savannakhet Province is located around six hours away from the Wattay International Airport, and attracts more than one million visitors a year from Thailand, Vietnam, China, Cambodia, Malaysia and Singapore.

“Macau Legend is confident that it has the experience and track record in operating and developing high quality integrated tourist project,” a spokesman for the operator said. “Over the long-term, we are committed to the future expansion of Savan Resorts.”

This includes plans to develop a second IR project on a parcel of land in the Savan Seno Special Economic Zone. The IR will be built adjacent to Savan Legend, and will include two golf courses, a 600-room hotel, villas, casino, exhibition hall, pool and spa facilities.

Macau Legend’s plans are ambitious to say the least, and show the operator believes Laos offers some serious potential in the long-term. But McCamley argues the country remains unappealing to some foreign investors.

“There is no real interest from first-world foreign investors at this stage because it is too difficult working with government and local power brokers who all have their hands out. In the past, operators and investors have put forward significant sums to open a casino on an official’s say-so, and all were closed within two hours of opening.

“The corruption and the cost to get in is the largest challenge for foreign operators. But in reality, no international group would survive. It is too inbred with powerful families with high government connections holding the power.”

McCamley and Macau Legend paint a very different picture of the Laos market, but the ongoing legal battle between Sanum Investments and the government is evidence of the fine line foreign companies and investors are walking when operating in the country at present.

But if Macau Legend can continue to grow the market with the help of investment from China and the Laos government, and its planned IR does indeed break ground, then there is certainly long-term potential for a significant gambling industry to emerge.









Asia Gaming Brief is a news and intelligence service providing up to date market information for worldwide executives on relevant gaming issues in Asia.

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