keywords: flight connectivity and accessibility into new markets, legislation and transparency, the importance of gaining the support of the state, the need for political change before laws will change, profiling the Indian, Thai and Vietnamese gambler, Singapore and Macau as models for emerging jurisdictions

G2E Asia 2010: Vietnam, Thailand and India – The Emerging Jurisdictions


00:00                     Jonathan Galaviz:  Good afternoon, ladies and gentlemen.  Thank you so much for joining us for this panel which will be covering Vietnam, Thailand and India looking at these countries as emerging jurisdictions in the Asian casino gaming industry and trying to understand the context of what they are, what they were and what they potentially can be in the future moving forward.  So we’ll go ahead and take a look at their connections to each other whether they have any common traits or whether they have areas where they have clear distinctions between each other.  We’ll go ahead and also take a look and ask our panelists here, our distinguished panelists, their views on government regulation and government interests in these jurisdictions.  Commercial and industry interests have [00:00:51] opportunities for market growth and market development and also look to see perhaps some views on how the investment community and how capital may flow into these markets as well.  So we have a very distinguished panel, we’re lucky to have them all together here today.  You have their titles and bios in the program information, these types of things, and so what I wanted to do was to let each panelist let them introduce themselves and talk about areas in which they have an interest in and their backgrounds and their bios and obviously allow them to share with you some of the unique experiences that they’ve had in the past.  And so I’ll ask each panelist to take two minutes to give an introduction and bio [00:01:41] to each of you.  And I’ll go ahead and start with myself.  My name is Jonathan Galaviz.  I’m the managing partner of Galaviz & Company.  Basically, I do strategy consulting for the casino gaming industry itself, do government advisory on tourism sector planning and then also do a lot of work for the financial community consulting with private equity funds and hedge funds that are invested in this industry and whom are always looking to make new investments in the industry.  And so those are my clients and I am based in Washington DC, Las Vegas, Singapore, et cetera.  So that’s my background and I’ve been involved in the industry for about ten years and have been exposed to basically every single jurisdiction where gaming is or could potentially be and so I’ve obviously been exposed to all of the emerging jurisdictions as well.  But I’ll go ahead now and let Michael introduce himself for two minutes and give a brief background and context of what he’s doing and then we’ll go ahead to Sunder and then Sean as well.  So Michael.

02:48                     Michael Gore:  Okay.  My name is Mike Gore.  I started in the casino industry as a regulator back in 1970, in the late 1970s, early 80s.  And I’ve been in Asia running casinos in different properties since 1990.  Right now, I operate two small casinos in Cambodia and another company I’m affiliated with has an interest in eight small slot clubs and casinos in the Philippines.  Nice to meet everybody.

03:25                     Jonathan Galaviz:  Great.  Thank you.  Sunder.

03:28                     Sunder Advani:  Yeah.  Good afternoon.  My name is Sunder Advani.  I’m the chairman and managing director of Advani Hotels and Resorts India Limited.  I just traded on the Bombay Stock Exchange.  Our company owns a hotel, 200-room, five star deluxe hotel which got the first slot machine license in India and this is in Goa and Goa is the first state to have casinos and that casino is still there, it’s called Goa Nugget.  It’s been there since 1993, we’ve been operating it ourselves.  And in ’96 the government of Goa opened up a little bit and said you can have table games on ships, they’re offshore, they’re floating.  So we got a casino license for a ship and that casino called Carabela has been the only casino in India for seven, eight years since 2001 that we opened and we’ve had a joint venture with Casinos Austria which is still present.  They were operating that casino.  And basically my background is more in the hotel industry.  I build for hotels for Holiday Inns when I came back from the U.S. and then for the hotels for Renaissance and Remota in India and Sri Linka.  So that’s a brief idea when I was a consultant in Washington before I came back to India, 16 years in the U.S.  This gives you a brief idea of what I did.  Thank you.

05:00                     Jonathan Galaviz:  Alright.  Thank you very much.  Sean.

05:02                     Sean Monaghan:  My name is Sean Monaghan.  I’m a senior director for CB Richard Ellis and head up their Asia gaming group which is just they’ve established recently.  We do things like feasibility, valuation, transaction work.  We do have a financing capability as well as strategy services as well.  I’ve probably been in and around the gaming industry for almost 20 years, a lot of that has been in investment banks, Deutsche bank, ABN and Merrill Lynch and I’ve worked for companies like Aristocrat and more recently Genting.  And the recent projects have been Macau, Philippines and more recently Cambodia.  So if anyone is interested investing in properties, you can give me a call.

05:53                     Jonathan Galaviz:  Great.  Thank you, Sean.  So the [00:05:58] approach for this panel is really going to be a dynamic one of Q&As and a little bit less structure and more focused on dynamic conversation.  And so in the context of that, at different times during this panel I’ll ask the audience if you guys have any questions or comments and please feel free and don’t be shy to interact with panel and get your views or questions out there.  It’s a great resource for you during this time period.  So one of my first questions really relates to there are basically two countries in the world that have more than a billion people and one is China and the other one is India.  And India has significant economic growth occurring just almost as the same degree that China is and there are tremendous market opportunities for various industries, technology, aviation, airlines, real estate.  And Sunder I was wondering if you could give us — take a few minutes and give us kind of a conceptual view of where things are strategically in India right now and then kind of maybe drill down to what the future could be, what it is now as far as the casino gaming industry and your views and perspectives on that.

07:17                     Sunder Advani:  Well, I’ll try.  It’s a big subject.  Well, as you rightly mentioned India is one of the few countries that’s over 1.2 billion people and the program said it was 3 billion so I wish we were 3 billion because nowadays population is not supposed to be a hurdle, it’s hard to get people to work so it’s an advantage you have a big market out there and especially since India has been growing over 8%.  There are a lot of people who have now lots of funds, disposable incomes to spare and I’d say they have more millionaires created every year and a lot of it is probably because of this outsourcing boom where everything is cheaper to do in India so everybody has moved there, outsourcing to India.  Of course there’s a lot of capital coming into India and it used to be some years ago people said invest in India you must be crazy, and now it’s the other way around.  If you’re not in India, you’re missing something.  And everybody including Volkswagen have their own plants over there now, Mercedes has been in there for quite a few years producing Mercedes cars, I believe they said there’s more Black Label drunk in Mumbai than produced in Scotland if you can believe that.  So that tells you how much buying power there is.  Indians do tend to like to gamble and so there is a great potential for this industry.  In fact, it’s bad luck if you don’t gamble on New Year’s Day which is Diwali so in fact everybody lights up their house at night, invite their friends and they play, of course, something resembling three-card poker, they invite their friends over.  If you don’t, you can have a bad year.  So that’s not a bad omen for the casino industry for people do tend to travel with their families though and they do take their holidays with their families so it is a little bit of a thing that the husband wants to gamble and the wife wants to avoid the husband from going to gamble and so it’s a little bit of a mish-mash trying to keep both sides happy so the integrated resorts that are coming up in Singapore will probably be a good place where both people can be happy and the wife and the kids can see something in Singapore and husband can be gambling away.  And the same thing in Goa, I mean, that’s a beach destination so you’d find that the husband is saying, well I’m just in this room here playing in the casino and you can be with your mother and, you know, she can take you to the pool or the beach or whatever it is.  So it’s a matter of taking the family along that matters in our society over there.  And of course, Indians do like to show off that they’ve been to such and such a place.  So it’s a little bit if an ego thing that some prefer to play within India, some prefer to play in Vegas or in Macau or in Singapore.  So I think it’s a country which has a lot of population which is poor but there’s a top 5% which is extremely wealthy and if you take even 5% of a billion too it’s a huge country that has a lot of spending power.

10:50                     Jonathan Galaviz:  So what do you think about the — so now going more narrowly to the casino gaming piece for those that are perhaps new to the subject of India, is casino gaming legal in India?

11:07                     Sunder Advani:  Well, it is a state subject so each state has its own jurisdiction like in the United States to allow casinos or not.  And so far, Goa was the only state that had allowed casinos and it’s perfectly legal.  Now Sikkim is another country which has also changed the law similar to Goa and they are also allowing casinos so one casino is operating there since the last several months.  So it’s perfectly legal and the central government doesn’t tell a state what to do.  But if money has to come into the company or money has to leave the country, then you have to go to the central government which is the federal government in New Delhi if you want a tie-up with MGM or Harrah’s or anybody else.  You’ve got to go to the central government and say, look I want to tie up with these people.  And then the answer will be that it’s a pure casino venture that they can’t invest in that company, if it’s a hospitality venture, they can and that’s what the future is really.

12:17                     Jonathan Galaviz:  So if there is any part of India where you think that, I mean, is there a potential Macau situation in India at any point in the next ten years.  Do you see a combination of foreign capital combined with a regulatory environment and approach to casino gaming that would make a specific part of India or many parts of India become what you see in say Macau or some other places in the world, you know, over the next ten years kind of looking long-term?

12:53                     Sunder Advani:  Well, you see the problem here is that mega projects attract a lot of attention.  If you do something like the Singapore or the Venetian here for example, that’s what Mr. Sheldon asked me, can you build a Cotai Strip for me in India, in any place in India.  And I told him that, Sheldon that’s the wrong approach because if you do something so big it gets into the public eye and then there’ll be a lot of people who are opponents of it who would come and get you and stop the train before it starts moving.  The saying is that if once a train starts running in India, you can’t stop it but the problem is to get it started in the first place.  So I think that what’s going to happen is there will be other states opening up and there will be trend towards integrated resorts with casinos in them.  But I don’t think it will ever like to become like the arrival to Macau because you’ve got 35 of — I saw casinos in a small area like Macau.  So if there are so many in one area, it’s going to create a huge problem.  There is a little bit of hypocrisy in the government, they do everything but they’re saying that they’re not doing it, they like to keep their eyes closed.  So it’s a difficult thing.  The central government doesn’t like to encourage casinos but they’ll say, okay the state is doing it for tax reasons so we’re not going to stop it.

14:27                     Jonathan Galaviz:  Interesting.  Sean, I’m curious about your perspectives on India, one is as kind of on the consumer side, I mean, do you think that there is demand for casino gaming in India and also do you think that it’s a market that the industry, us, in the industry should — should the industry be making business development investments in India to potentially capture some of these opportunities that may evolve over the next five to ten years in India?

14:57                     Sean Monaghan:  Well, it’s really one of those theoretical questions because you don’t actually have passage of regulation.  We’ve had some disappointments across some of the emerging markets where, you know, there was a point where Thailand was meant to legalize and everyone got really excited about Thailand.  And then Taiwan was just about to legalize and everyone gets very excited about that.  And even later England that was meant to restructure and a whole lot of people spent a lot of money in England, their business development teams and bidding teams and after a while in the business development front you can become jaded.  So until you can get some clarity over a timeframe for regular free change and clarity over potentiality what the change could be, that’s when you’re going to get the money coming in and the teams on the ground and all the feasibilities.  I mean, I haven’t been to India for a while and I do love India.  I mean, I spend most of my time in Singapore and it’s a very, very good Indian population, very wealthy Indian population in Singapore.  And I spend a lot of time in Marina Bay Sands and over at Genting’s Resorts World and there is a little bit of presence of Indians on the floor, obviously you had a smaller proportion of the population is Indian but, you know, it’s there but really the crowds on both casinos are disproportionately Chinese.  But are those Chinese gambling on cricket, you know, probably not but I guess that there are a lot of gamblers in India that are currently gambling on the World Cup or on cricket and stuff like that.  But I haven’t been to India for a while to really get a good feel.

16:42                     Jonathan Galaviz:  Interesting.  Michael, do you have any perspectives on India as a market, whether as an outbound market for the Asian casino-serving Indians or either from a development perspective within India?  Do you have any perspectives on it?

16:59                     Michael Gore:  Yeah.  I do think India has the potential of being Macau.  I’ve given presentations to a number of municipal governments in India about casino licenses.  I always thought that there was going to be a big problem with the federal legislation in India but there’s not.  Sikkim just opened casinos, Goa has more casinos than they intended, almost 20 right now, 20 different casino properties in Goa.  The only question is what’s the next place in India that’s going to be.  There are three things basically everybody wants to have in life, right?  One is sex, the other is gambling and the other is to get high.  These three things, as people earn more money in Asia, they will want to spend more money on these three things.  I guarantee this.  And you’re going to see India grow enormously as a gaming destination just like Macau won $2 billion last month, $2 billion in one month’s time.  They’re going to earn this year three times as much as the entire state of Nevada.  So the need is growing and as long as we can write the lowest property and offer more facilities the revenue is going to grow fast.

18:23                     Jonathan Galaviz:  Sunder, obviously to have a robust casino gaming industry or even an integrated resort industry in India, you have to have tourism infrastructure.  I’m curious in your perspective right now, how is the airline connectivity both domestic and international for India?  How are the regional airports and some of the airports where perhaps, you know, international business people may not actually go but the domestic population in fact uses, how is the airline infrastructure looking right now?

18:55                     Sunder Advani:  Well, surprisingly it’s improved significantly in the last five or six years.  We used to have only one national carrier, Indian Airlines that used to be allowed.  Now we’ve got what they call private airlines say about eight or nine of them operating and they have service between smaller cities of India and not just have to go to the hub again, you can fly from Goa to Jaipur for example which is another tourist attraction [00:19:24] to always go to Bombay to catch a connecting flight.  They have beautiful airports that have been built in Hyderabad, Bangalore and even in Bombay and Delhi recently and all these international flights like Lufthansa says they have more flights from more cities in India than anyone else.  They’re flying to small places like Pune which is, you know, about 100 miles out of Bombay which is a smaller town.  And all the carriers want to come into India and they have been given recently a lot of landing rights to go to many cities so it’s actually very easy to come into India now and to go within India from one place to the other and the choices are many and the private carriers have really brought down the fares within India.  Before it used to cost a fortune but now say Bombay, Delhi and Bombay, Goa would be hardly $50.00 one way in most days except Monday morning, maybe they increase it to $100 or maybe more.  But the fares have come down and it’s easy to get [00:20:26].

20:27                     Jonathan Galaviz:  Sean, what do you think is the investor appetite now for India, I mean, when we talk about institutional capital, you know, large private equity funds and the financial market itself?  Do you have any idea kind of how financial markets look at India right now from an investment perspective, if they even look at it at all, if it’s even on their radar screen for the casino gaming industry specifically?

20:53                     Sean Monaghan:  Well, I don’t think there’s a lot of depth in terms of listed stocks with exposure to India, do you know what I mean?  So you do need sizable companies with exposure so it’s probably an immature market from an investment point of view.  I mean, my greatest exposure to India from an investment point of view is really when I covered property.  I have Merrill Lynch covered stocks like CapitaLand, you know, CapitaLand has huge tie-ups with the property groups in India the same way as they’re trying to have been rolling out shopping centers across China.  They’re trying to roll the shopping centers across India.  The growth rate in China has been spectacular because governments were assisting, it was assisting acquisition of land, the title of land, the financing was a lot easier in terms of getting the money in there, structuring with funds, the development timeframe is much shorter for each property and yeah, they were very, very successful in raising billions of dollars for all the shopping centers, monetize it back into rates and rate structures were created to facilitate all that financing.  However, on the India front the growth was much slower because at the local level they have problems, they’re getting land title.  They have problems at the bureaucracy, difficulty in getting supports from government and all that sort of stuff.  So I suppose from an institutional point of view, I can see the massive consumer demand, I can see the massive opportunity long-term but there’s probably been a little bit more frustration on the short-term, actually getting mega projects off the ground as the same rate as what was happening in China.

22:39                     Jonathan Galaviz:  Okay.  Thank you.  Okay.  Well, let’s go ahead and we’ll come back to India perhaps a little bit later but are there any questions from the audience right now as far as what we’ve covered so far in India?  Is there any questions or comments about that?  Anybody?  Okay.  We’ll go ahead and move forward to Vietnam.  I’m curious, Michael, on a few things.  One is, how would you rank Vietnam, well say, you know, is it top one, top three, top five as far as new emerging jurisdictions?  How does it look like from a business perspective and also from a regulatory perspective?  How is the Vietnamese government approaching casino legalization and how are the companies that are currently operating, they’re navigating that environment?

23:30                     Michael Gore:  Yeah.  Okay.  The Vietnamese government is moving to codify their gaming regulations.  Now, gaming is completely under the Ministry of Finance and they’re working on coming up with some regulations.  If they do a good job and if they have a low tax rate, a reasonable tax rate, they will be able to fight Macau for leadership in the gaming industry worldwide.  But I don’t know if it’s politically possible to do that.  Everything is a political problem even in Macau.  But if they do it properly, they will be able to fight.  It’s a great, great place and everybody in Vietnam loves to gamble.  There’s not one person that doesn’t gamble in Vietnam.

24:20                     Jonathan Galaviz:  One of the things that struck me interesting about Vietnam and the work that I do is that, you know, the process of casino licenses almost seems like it’s on an ad hoc basis.  It doesn’t seem like there’s a set regulatory or a legal structure that says like you do this process and if you pass our government review you will get a casino license.  It seems very kind of one off-ish and not a structure or method to it.  And Sean I was wondering if you see that same thing or if you don’t or if you have any views or perspectives on Vietnam’s kind of casino legalization licensing regulatory approach to the industry right now.

25:10                     Sean Monaghan:  Yeah, I mean, to my knowledge all of the existing casinos are foreign only and you have had casinos which are sitting on the board with China which operated very successfully and then we’re told to shut down because the owners and controllers for China using the Chinese government told them to shut down.  So, I mean, you can get casino licenses but you have to have some sort of ability to fill your casino either with Vietnamese who also have a dual passport from another country or you have to have some sort of ability to bring them in so you have to have a location with accessibility.  Even though Vietnamese love to gamble, it’s difficult to tap that market unless, you know, you’re doing it on the side.  But, you know, there are clubs in Ho Chi Minh and Hanoi that, you know, full of Vietnamese with a dual passport and they spend a lot of money.

26:09                     Jonathan Galaviz:  So is it the case that, you know, for those in the room that aren’t familiar with Vietnam, I mean, can Vietnamese nationals gamble in Vietnam?  Sean.

26:22                     Sean Monaghan:  Yes, if they lived in the U.S. for the green card, got another passport, came home [00:26:27] and then they don’t gamble.

26:30                     Jonathan Galaviz:  Okay.  So basically if they hold just a Vietnamese passport, they’re just a citizen normal they’re not —

26:37                     Sean Monaghan:  Technically that’s illegal.

26:39                     Jonathan Galaviz:  Technically that’s illegal, right.  And do you see that changing at all in the next five years?

26:49                     Sean Monaghan:  I have no idea.  It’s very difficult to predict that sort of political change because it is political.  I’m not closing up to the government to get a feel for, you know, what they’re going to do but from all that I hear that it’s quite a challenge to do something like that in a short-term.  Lots of promises have been made to a lot of people but it’s not easy.

27:12                     Jonathan Galaviz:  Sunder, do you have any views on Vietnam as a market whether as an outbound market, inbound market, a place for investment?  Do you think that it should be a priority for companies looking at Asia whether it’s the suppliers or the casino gaming companies themselves or real estate development?  Do you think that there is a market opportunity in Vietnam or do you think it’s a market that you should kind of sit back, wait and see how it turns out?

27:39                     Sunder Advani:  Well, the one disadvantage is what he just pointed out was that Sean said that the Vietnamese themselves can’t or legally go into a casino.  That would deter some people I think from investing there.  But I haven’t been to Vietnam, I hear it’s a beautiful country and many Indians are going there because I believe it’s quite reasonable and beautiful.  But, I mean, Indians are actually investing overseas a lot and in the last five years you find a lot of outbound capital going out of India but at the moment I don’t think that that would be a priority for them to go to Vietnam and such.

28:17                     Jonathan Galaviz:  Michael, if you were to have a sit down meeting with the Vietnamese government and telling them exactly the best approach that they should take in legalizing an approach that would maximize capital investment into the country from this industry, I’m putting you a little bit on the spot, what would be kind of the top three things that Vietnam should do to create an environment that would maximize investment into the country as it relates to the casino gaming sector.

28:56                     Michael Gore:  It’s not even on the spot, this is just — it’s kind of obvious but it never happens.  One, have a low tax rate on casino win.  This is not an income tax for the company, this is a low tax rate on casino win, that would bring a lot of investment.  Another, have the regulations clearly stated before the guys come in to make the bids.  And the last thing is let locals play.  Singapore did charge anybody $100 to walk in the place.  Right now, they’re making close to $4 million a day in revenue for the government just off the entry fees in the casinos in Singapore.  So this is a great thing.  So I think Vietnam if they look at what Singapore did and follow, they’ll be fighting and they’ll have a decent industry.

29:50                     Jonathan Galaviz:  If Vietnam was to develop into a robust casino gaming destination, would it draw or compete substantially with a place like Macau?

30:01                     Michael Gore:  Absolutely.

30:02                     Sunder Advani:  Absolutely.

30:03                     Jonathan Galaviz:  Absolutely, okay.  And who would they be competing for?  Do you think Vietnam can actually draw mainly Chinese visitors?

30:12                     Michael Gore:  Sure.  Sure, I mean, so many people living in Ho Chi Minh and even Hanoi and in Vietnam in general are ethnic Chinese or are related to people in China currently or from China or Taiwan and working there.  Yeah, they can easily compete with Macau if they do it properly.

30:33                     Jonathan Galaviz:  Okay.  And Sean, should I be buying real estate in Vietnam right now as it relates to — you know, I mean, let’s say it’s unclear, let’s say it’s cloudy as to what’s going to be happening with the gaming sector in Vietnam over the next five to ten years, but is there enough that could potentially happen to where I should position myself from a real estate perspective?

30:57                     Sean Monaghan:  Okay.  So, I mean, I’m CB Richard Ellis who doesn’t run Vietnam, I don’t run the office in Vietnam but you ask me whether you should be buying real estate, I mean, from a personal level I’ve spent time in both Ho Chi Minh and Hanoi and I love Vietnam.  The beaches are spectacular, the countryside is spectacular.  Long-term growth for Vietnam I’d be a buyer personally, I mean, I love it but then it also comes down to location and price.  But getting back to your other question about what the government could do, I mean, sometimes people describe Vietnam is like China but several years ago.  I mean, China is solving the casino issue by clustering the casinos in a certain location but we are in Macau.  Maybe that’s a solution for Vietnam, it picks a location it says, well, all the casinos for the next X years, da-da-da-da, I mean, you’ve taken what Mike was saying about an entry fee, I mean, that could be a solution instead of scattering them across the country you can just pick one location.  So, who knows, I mean, Lloyd Nathan was meant to be here today and I think he is one of marketing trips trying to raise some money for his project but maybe a location of his project could be a cluster for, you know, mega resorts.

32:22                     Jonathan Galaviz:  Michael, one of the things that I’ve been seeing in Vietnam which has been interesting is some of the large corporate entities have been creating or have been looking to create joint ventures in Vietnam essentially whether it’s a branding joint venture or whether it’s an actual equity joint venture for the development of integrated casino facilities in Vietnam.  Do you think that’s an approach that established high quality casino gaming companies should take in respect to the market opportunity in Vietnam or should they sit back and continue to see it develop?

32:56                     Michael Gore:  Yeah, you know, U.S. companies in particular are bound by so many restrictions and guidelines, there’s just a lot of things they can’t do going into a market like Vietnam.  You’ve got to have a strong local partner who can handle the regular authority side and handle the government to be able to operate.  The only way to get into Vietnam is with a local partner, an outside company can’t do it itself.  The same is even more true in India.  You have no chance to go in India by yourself, you have to have a local partner with political strength.

33:32                     Jonathan Galaviz:  Sunder, do you agree with that?  Do you think that for India you need to — for many of these emerging jurisdictions, is having a joint venture partner necessary to be successful in that market if you’re not an Indian national?

33:45                     Sunder Advani:  Yes, of course.  You do need a local partner but I think the tendency is to try to find a partner who is, you know, deemed to be very, very powerful with the various authorities.  But I think what you need as a person who really has time to develop, to devote to the project because some of these guys got so many, you know, things they’re doing that they don’t have really time for that particular project and even though they may be a big name whether they are in textiles, airlines and I don’t know, et cetera, but they have no time, you have to have somebody who has time who can follow up and have patience because patience is what pays in India.

34:30                     Jonathan Galaviz:  Looking at Thailand — first of all, is there any questions about Vietnam?  We can always revisit a little bit later but are there any comments or questions about Vietnam as a market from the panel?  Okay.  Looking at Thailand, and Thailand I think is going to be an easy question to answer, but what is your perspective on Thailand?  Is it going to be a market that should be seen as a highly viable area?  It continues to be mentioned every three months, you see Thailand pop up.  But of course Thailand had substantially political issues, they’ve had substantial strategic issues to deal with particularly in the last couple of months.  And my question for the panel is, is Thailand a viable market for the casino gaming industry?  Does it have what it takes to develop substantial assets there and develop an industry there?  And second, do you think it ever will?  Sean, do you want to take a first stab at it?

35:31                     Sean Monaghan:  Yeah, give me the easy question.  Oh, god, unlikely in the short-term, I mean, I asked Paul Bromberg, he’s from Spectrum who’s at the conference but if you run into him, talk to him about his views on Thailand because he lives in Bangkok.  I mean, I was getting orders from him on whether we thought there was going to be almost like a revolution in civil war in Thailand because he didn’t know I love Thailand, it’s my number one for a tourist destination but the political instability, the social unrest, I mean, even when [00:36:11] was there, yes there was a chance of getting potential casino regulation through but, I mean, when is the political environment ever going to be stable again.  I have got no idea.  I mean, once it becomes stable who’s going to be the party that stabilize it.  Will they support casinos?  I mean, there is hundreds of illegal gambling venues in Thailand and across Thailand and you have to go to a Muay Thai fight and see people betting everywhere.  They’re so integrated in terms of the politicians and the police force and corruption.  The stakeholders just don’t want to legalize that industry.  I mean, if you want to get a play on Thailand maybe invest in a project in Cambodia.  I mean, that’s probably the easiest way to do it but trying to predict political stability there is just a tough one.

37:02                     Jonathan Galaviz:  Sunder, do you have any views on Thailand and kind of what it is or what it isn’t right now?

37:07                     Sunder Advani:  One issue is I think Sean clearly pointed out.  The politicians do control a lot of things that do happen and since it takes a long time to build a hotel or a casino although you may have understanding or a deal with politician A, by the time you’re ready to open, maybe B has come in or even C has come in so you have to be very alert to such things because if you’re relying on a particular politician to see it through and it takes a long time to get yourself going, you may be in for a surprise and that’s a big risk for anybody who’s putting a lot of money into it.

37:49                     Jonathan Galaviz:  Michael, do you have any views on Thailand other than, you know, kind of the obvious which Sean has gone over?

37:56                     Michael Gore:  When the great and noble king of Thailand who is a truly outstanding monarch passes away, casinos will come in within a year in Thailand.  So it’s just a matter of time.

38:12                     Jonathan Galaviz:  So you do think that Thailand based upon some future development of its kind of political structure and how it’s organized that once there is some type of transition that you think Thailand is a good market to position for?  I mean, would you make investments right now into creating alliances, strategic partnerships with say Thai real estate owners or hotel companies that operate in Thailand calculating for that potential future transition?

38:50                     Michael Gore:  I’d start building a relationship —

38:52                     Jonathan Galaviz:  Right now.

38:53                     Michael Gore:  Yeah.

38:54                     Jonathan Galaviz:  Okay.  Sean, in the context of Thailand’s tourism sector, Thailand’s tourism sector is really one of the strongest in Asia from my perspective barring the flame ups and political land and other issues that they have that come up.  Do you think that Thailand in the context of Asia, if Thailand were to legalize casino gaming and if they were to receive substantial multi-billion dollar investment for the integrated resort casino developments, do you think Thailand would pose a competitive threat to either Singapore or Macau?

39:39                     Sean Monaghan:  Alright, you’re giving me the great questions.  I think there was lot of ifs in your question.

39:45                     Jonathan Galaviz:  Sure there is.

39:46                     Sean Monaghan:  I mean —

39:47                     Jonathan Galaviz:  They’re emerging, Sean.

39:48                     Sean Monaghan:  Yeah.  I’m going to Phuket next month for a holiday.  So I’ll stay at a resort because Phuket is pretty safe.  There’s no way in the world I’m going to go to Bangkok in the near term because I’m taking my wife and two-year-old daughter and I’ll take them to Phuket because it’s safe.  But I don’t know, I know Mike is very bullish potentially when the monarch if he passes away and, I mean, who’s going to replace him, who’s going to be the next one, which son will it be.  I know certain times he is very supportive of gambling but trying to go and pick political structures —

40:23                     Michael Gore:  If you want to have a good time are you going to go to Bangkok or you’re going to go to Singapore?  The question answers itself.

40:30                     Sean Monaghan:  No, no, no, no.  Okay, I love Thailand, great place, but I mean, what’s in a regular tree structure are you going to have?  Is that going to be conducive to getting an institution to be able to invest there?  I mean, are the U.S. gaming companies ever going to be able to invest in that sort of environment?  I’ve got no idea.  But okay, look at Thailand, very, very strong demand for gambling, no question about it.  Tons of gambling.

41:02                     Jonathan Galaviz:  Yeah, I think, you know, Thailand is a great place, I mean, I spend a lot of time in Thailand for business reasons, pure business.  And, you know, the Thai people are great people, they have a great culture for hospitality and it’s one of the places where they take the hotel business very seriously as well.  And it’s one that I think is — it’s an interesting market, you know, Thailand’s potential at least I’m giving my view now, I think, you know, obviously ethics and transparency and the ability to regulate this industry and to be seen as a credible regulator of this industry in Thailand would be an important hurdle for them to overcome and I think that’s going to be necessary should Thailand ever receive multi-billion dollar in investment.  I don’t think that large financial markets or large finance institutions will be too comfortable investing into Thailand or letting their capital drift to Thailand should there not be a robust regulatory —

42:17                     Michael Gore:  And they weren’t in Nevada either.  I mean, for many, right, for maybe 40 years the only money that filled Nevada was the Teamsters Pension Plans.  The banks wouldn’t even touch it.  But now everybody wants to.

42:30                     Jonathan Galaviz:  So, you know, it will be interesting to see how that evolves and the evolution.  But I think there is certainly a very, very unique proposition for Thailand.  And Sunder, do you have any views on — is there any across the border activity between Thailand and India.  I mean, if Thailand was to legalize, you know, let’s say hypothetically and many ifs in the situation that they create a regulatory environment that’s good, they legalize casino gaming and they receive multi-billion dollar in investment, would Thailand be able to receive visitors from India in the same way that say Singapore would?

43:12                     Sunder Advani:  Absolutely.  Thailand is a very much favored destination for Indians even now and this will give them an additional reason for going to Thailand.  The only disadvantage is that the language isn’t easily spoken so an Indian feels Singapore is more English speaking so it’s more his cup of tea.  But otherwise, certainly it’s a closer flight, it’s only three hours from Delhi and Bombay and Thai people are very friendly and I would say yes, definitely, it would be a good place that people would go to.  If there was a proper casino, yeah.

43:48                     Jonathan Galaviz:  And Sean, from your previous career affiliations, have you had experience with Thai customers and other places outside of Thailand and are they a good demographic to go after in the context of Asia tourism and casino gaming?

44:08                     Sean Monaghan:  I mean, there’s some massive gamblers from Thailand.  There’s some massive gamblers from Thailand that live in Macau.  There’s a lot of people left from Thailand, they go and travel and gamble.  You know, there’s a huge amount of wealth there.  Some of that wealth is either captured by illegal properties in Thailand or goes to Cambodia.  But there’s a lot of money in Thailand.

44:30                     Jonathan Galaviz:  So looking at these three markets and I’d give you guys 30 seconds to think about it, if you were to rank them as far as where you would put your business development, resources and your marketing resources and looking at potentially developing these markets, how would you rank them number one being the most favorable or the best place to put the money for a future development and number three being the least.  How would you rank these markets in terms of priority?  Michael, would you like to take a stab at that as far as which one of Vietnam, Thailand and India do you think would be your number one shot, number two and number three.

45:13                     Michael Gore:  Okay.  India is the most problematic because the regulation and the bureaucracy is so overwhelming.  We were just talking before it takes 46 licenses to open a hotel in India.  Forty-six licenses you have to negotiate with local jurisdictions and there’s all different departments, traffic, electric supply, environment.  Sunder was just saying that it’s painful.  It’s painful.  Foreign companies just can’t go in and do it.  It will be difficult for some time.  But Vietnam also that just goes a fact that regulations aren’t written, it just depends on the current PM and how much political drive he has to start writing regulations again and that thing in order.  But right now, Thailand is going to be soon and people would say, Thailand will license very soon.  I’d say, just don’t hold your breath, just don’t hold your breath with the license.  But now I think very soon it will happen.  I’d go for Thailand first.

46:14                     Jonathan Galaviz:  So you say Thailand first and then who would you say second.

46:19                     Michael Gore:  You know, Vietnam only because I think they won’t put effective regulations in place and India has the most potential and the most potential earnings and the most players but it would take the longest because the regulatory process is so slow.

46:34                     Jonathan Galaviz:  Okay.  Sunder, what about your perspective if you were to rank your top three markets in order of priority?

46:42                     Sunder Advani:  Well, not because I’m from India but I still feel India is the place because local people can walk into a casino.  There are 1.2 billion people sitting at your door who can get in.  That’s your biggest advantage I think, and that’s why I would think India would be the one that would come first in my opinion.  These 46 licenses, it’s true but the point is that you’ve got a couple of years, three years to build a hotel and by the time, you know, you get going you will have them, the question is that you’ve got to be patient to make sure you’d go to the right guy, maybe the file that’s sitting in this drawer, they’ve got to go to this guy here and say why are you holding this file here, what is your initial offer, I’m holding this information you want, why did you send it to your bosses here.  You’ve got to more or less hand carry the file sometimes.  It’s a little bit time-consuming but the reward is what’s important at the end because the one thing is they have the U.K. laws that apply in India.  So people feel comfortable.  It’s all based in the U.K. system.  And the third is the currency is very stable.  In fact, it’s appreciating against most currencies.  And that’s what I think an investor would look at is that his investment that he put $10 million on is it going to be worth $10 million at the end of the time when he wants to exit.  And there are easily ways of exiting because there’s a regulated stock exchange in operation in India.  The other thing you have the is the GDP is growing so fast, everybody is going to make some money and they’re going to have money to spend.  So that’s why I would put India as number one on this list.

48:22                     Jonathan Galaviz:  So who would be your number two?

48:24                     Sunder Advani:  I would still go for Thailand as number two partly because I think people are more familiar with Thailand, they’ve been there before even though Vietnam and Thailand all have languages that the Indian doesn’t understand but still I would say that even from a foreigner’s point of view I think Thailand is more established, there’s a brand for tourism purposes, success story number one in tourism.  I would rank that as two and maybe —

48:50                     Jonathan Galaviz:  And then Vietnam would be your number three?

48:52                     Sunder Advani:  That’s right.

48:52                     Jonathan Galaviz:  Okay.  Sean, what’s your perspective?  What’s your ranking of the three jurisdictions?

48:59                     Sean Monaghan:  I’m going to be different.  I mean, you obviously got two different types of investment.  One is, your business development research for long-term investment versus your money that you can invest today in a profitable [00:49:12]. To me, you know, for your on the ground meet and greet, build relationship, steady market, I’d be looking at India and Thailand for that.  But actually on the ground profitable venues today which I’d invest in, in these emerging markets I’d go Cambodia and Laos.  Vietnam probably sits somewhere between there but there’s not that many foreign-owned casinos located that you could potentially really invest in.  But at the end of the day, you have to look at the growth in Macau and why don’t we just park our money here.  So I’m going to be different.

49:49                     Jonathan Galaviz:  So what about your two and three if you’re to take a look at India compared to Thailand?

49:57                     Sean Monaghan:  Yeah, but again these are emerging, you know, you can’t — well, they’re case studies once you look at and waiting for a potential investment instead of investing today in a physical operating property.

50:10                     Jonathan Galaviz:  Okay.  So you would say your two and three would basically — you’d put Thailand and India in the same situation.  Okay.  So that’s what you call ladies and gentlemen lack of consensus.  So Michael is with Thailand, Sunder is with India, Sean is basically I can say Cambodia, Laos and Vietnam.

50:34                     Sean Monaghan:  Simplified just say based in Macau.

50:36                     Jonathan Galaviz:  Just in Macau, alright.  So, you know, and my views on this I think actually all of the reasons for the number one ranking of these different areas is probably true.  I think that that Thailand is one of those high risk, high reward markets, you know, it’s going to be one of those markets where if you go in it’s going to be a substantial opportunity and if it doesn’t play, then it really doesn’t play out.  I think India is really great because it has that massive middle market, middle class emergence that’s coming up, that’s really wonderful.  Same dynamic as mainland China just in the India context and so there are substantial opportunities there.  And then of course Sean’s view on kind of the established markets.  I’m looking at those in comparison to some of these.  I think it has merit too obviously.  It’s easier to be affiliated and invest money, not invest money from an investment perspective but invest in marketing and business development and to markets that are already clearly proven and seen as its development.  Before we go to closing comments, I wanted to see does anybody in the audience have any questions, anything about Vietnam, Thailand or India.  Yes, gentleman there.

51:50                     Male 1:  It interests me that the speakers indicated in the —

51:55                     Jonathan Galaviz:  You just speak a little bit louder.

51:59                     Male 1:  It interests me that the speakers indicated in India and Vietnam you’d need a partner and in contrast to that I think in both Malaysia and China the trend is toward not having a partner, having a low fee and I think I understand the statements said that while you need connections in Vietnam and India to get things done where at least my experience is that there is a chance, you know, in China and Malaysia to be able to do it without a partner and perhaps to protect one’s intellectual property is easier although a lot of people think that isn’t true in China.

52:58                     Jonathan Galaviz:  So the question really is really about are joint venture partners necessary?  I mean, let’s take a look at what’s already happened, I mean, in the Macau context rather than kind of the initial stages when liberalization first occurred but shortly thereafter, you know, Las Vegas Sands basically operates in Macau as a standalone entity with its own standalone viability.  And Singapore it was one of the bidders that went alone, they did not have a joint venture partner when they submitted their bid to the Singapore government and they ultimately prevailed.  And so I guess there is a reality check perhaps of is really a joint venture partner strategically necessary to prevail in these markets.  Just a quick take, one minute Michael and Sunder and Sean.

53:51                     Michael Gore:  I hate even to say this because I’m going to sound like an ugly American but transparency is a big part of the process.  Singapore was able to maximize the investment from the big companies they solicited because the rules were on the internet, you could read what it was, you know how much you had to invest and it basically extorted the companies to offer the maximum investment they could.  It was fantastic process and well done.  But I don’t think you’re going to see that anywhere else.  Nobody else would be that transparent.  It won’t be that open and above board.  There’ll be some background view going on somewhere and they won’t be able to maximize the investment.

54:32                     Jonathan Galaviz:  So you’re saying in the context of these emerging markets basically because of that strategic partners or joint venture partners become not only a thing that you would want but actually that you need.

54:47                     Michael Gore:  Ho Chi Minh City could do a $10 billion investment with no problem.  Although the market sale is a little iffy right now but it would be worth to invest $10 billion in Ho Chi Minh.  But it would be very difficult to get it without transparency.

54:59                     Jonathan Galaviz:  Sunder, in these markets, is having a joint venture partner absolutely necessary?

55:04                     Sunder Advani:  Well, at least as far as India is concerned I could say this much that if they go in for an existing hotel and try to expand it and they may not need an Indian partner because if they try to do a greenfield project from scratch then all these permissions come into.  But if somebody has already got those and their hotel is up and running and they just want to add and expand it, then maybe they can do without one.  But it’s still difficult, it’s better to have a local person along with you but the only way they could do it is if they go in for an existing deal that’s if they want to keep the local personnel.

55:44                     Jonathan Galaviz:  I see.  Sean.

55:47                     Sean Monaghan:  I think I disagree with the other two speakers.  I mean, local partners can do things that other people can’t.

55:56                     Jonathan Galaviz:  Okay.  Very dynamic.  Alright.  We have time for one last question.  Is there any final question that any audience member has either on Vietnam, India or Thailand?  Anything at all, any comments?  One, yeah.  The mic is coming to you.

56:18                     Female 1:  Regarding the 29-page draft in Vietnam that recently came out, what do you think will be the next step, I’m not sure where we’re at with it.  Could you elaborate on that just a bit?

56:29                     Jonathan Galaviz:  Is there anybody familiar with — you said the 29-page draft, are you familiar with that Michael?

56:35                     Michael Gore:  You know, I’ve seen a lot of drafts on the Prime Minister’s office there in Vietnam about gaming, how to proceed, whether they do the border states and everything, I think they’re in a process right now of figuring out the direction.  But one issue that’s going to stand out the whole transcript project if they decide to issue licenses to keep the money from going out of the country and they issue licenses in the country for Vietnamese people to play, is going to be very [00:57:02] is going to be screaming.  It will be interesting now if they proceed along the way if they’re talking about in that draft.  And if they do clarify the regulations the way that government is talking about.

57:18                     Jonathan Galaviz:  Well, as all of you can see Thailand, India and Vietnam, they’re all, they’re very much emerging.  There’s obviously risk and rewards in each of these markets.  It’s important to analyze them, to think about them and to obviously assess your businesses viability and each of these markets in the context of whether they can be successful for your business but it’s worth taking a look at and talking and understanding in even more detail and obviously the panelists will be available to discuss those after this if they have time.  But I want to thank Sean, Sunder and Michael for being excellent panelists and I appreciate the time that you’ve given and it’s been a very good discussion.  Thank you so much.

58:01                     Michael Gore:  Thank you.



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