Category Archives: Casino

South Korean lawmakers charged over Kangwon Land hiring scandal


Two South Korean opposition lawmakers have been charged in connection with their alleged involvement in the hiring scandal inside the Kangwon Land casino.

South Korean lawmakers charged over Kangwon Land hiring scandalKBS World Radio reported that Rep. Yeom Dong-yeol and Rep. Kweon Seong-dong, members of the conservative Liberty Korea Party, were indicted for abuse of power and business interference following allegations that they wielded their influence to ensure the employment of their acquaintances in Kangwon Land.

The case against Kweon and Yeom stemmed from the investigation conducted by South Korean prosecutors against former Kangwon Land CEO Choi Heung-jip, who was accused of hiring hundreds of people based on their political connections.

The hiring scandal, which rocked the governing Democratic Party, was dubbed ‘Kangwon Land Gate.’ It was also described as “a crime which would have been possible only in the 1960s or ‘70s.”

During their investigation, prosecutors alleged that Kweon’s former secretary, only identified in local news reports as Kim, bagged a managerial-level job for checking water quality at the casino after the politician pulled some strings.

Kangwon reportedly had a list of applicants—33 job seekers to be exact—but Choi ordered officials to hire Kim.

The state lawyers found that a total of 50 individuals landed a job at the casino because of their ties to Kweon and Yeom. The prosecutors earlier sought to have Yeom arrested, but parliament refused to hand him over to the authorities. Kweon managed to get a judge to quash the arrest warrant request against him.

Last year, Kangwon Land’s operator issued an official statement admitting that 493 of the 518 people hired between July 2011 and February 2014 got their jobs primarily on the strength of their ties to politicians or other influential figures.

In March, South Korean President Moon Jae-in ordered the dismissal of 226 Kangwon Land employees after learning that they secured their jobs through unlawful means.

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Imperial Pacific could bring in night construction workers to finish casino on time


Imperial Pacific International (IPI) is trying desperately to finish its Imperial Pacific Resort (IPR) in Saipan as fast as it can. However, company officials admitted to the Commonwealth Casino Imperial Pacific could bring in night construction workers to finish casino on timeCommission last week that it doesn’t believe it can finish construction by its August deadline, and has asked for an extension until December. Even with that extension, IPI has acknowledged that it might be necessary to employ a second shift of construction workers, who would have to work at night, to complete the casino by December.

VP of construction, Erik Poon, is currently discussing the possibility with the casino’s contractor, Pacific Rim Contractors. The executive was quoted by the Saipan Tribune saying, “Pacific Rim and IPI have been talking about second (work) shift which will start after 7 pm until midnight. Right now, we already notified the people concerned about the possibility of night shift work.”

According to Poon, “The exact date we still have to iron out with Pacific Rim because right now, we have to put the safety features needed especially at night before we put a date for the second (work) shift.”

A lack of manpower has been the primary reason for delays of construction, according to Poon. IPI has increased the amount of construction workers considerably over the course of the past several months, but it may have been too little, too late for IPI to meet the schedule.

“For the past few months, IPI has significantly increased manpower, especially from IPI’s side as we have H2-B workers. It helped us a lot to put our schedule even further… Moving along I can say we are back to normal like the way we want it,” Poon said, according to the news outlet. “Currently, we have 68 management staff and 1,402 workers in construction—44 from Sinopan, 677 from Pacific Rim, and 700 IPI H2-B workers… we are still hiring… our requirement is 1,500 workers and right now we have 700 so we still have room to grow for sure.”

The IPR has been plagued with issues and delays almost since construction began. There have been accusations of financial improprieties, lack of adherence to contractual agreements and violations of employment agreements. In March, four Chinese companies involved with the resort’s construction were ordered to pay $14 million in compensation to more than 2,400 workers stemming from unpaid wages and subsequent damages.

When it is complete, the IPR will be a luxury integrated resort on the US territory with more than 200 gaming tables, 350 slot machines and a 14-story hotel. There are also plans for beach and night clubs to be added to the resort.

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Macau casino GGR slowdown extends into June


Casino gross gaming revenue (GGR) in Macau grew at a moderate pace in June, much to the disappointment of gaming analysts.

Macau casino GGR slowdown extends into JuneFinancial records showed that Macau casino GGR grew by 12.5 percent to approximately MOP22.49 billion (US$2.81 billion) last month compared with MOP19.99 billion ($2.49 billion) in June 2017. The result was lower than the analysts’ consensus of 18 percent.

The June results brings Macau casinos’ GGR tally for the first half of 2018 to nearly MOP150.22 billion ($18.66 billion), a year-on-year expansion of 18.9 percent.

Gaming analysts attributed several factors behind the GGR slowdown in the last two months after a having stellar runs in April and March 2018, with international brokerage Union Gaming noting that business volumes across Macau fizzled in the last week of June.

Union Gaming added that Macau continues to bear the brunt of the World Cup, with some gamblers opting to postpone their trips to Macau.

The month of June was also considered one of the toughest comps of the year. Union Gaming analyst Grant Govertsen pointed out that “June still grew 12.5 per cent on top of a nearly +26 per cent comparison.”

“Without truly feeling the benefit of the newest supply and against a tough comp, we think the market is demonstrating its resilience with GDP+++ growth and would look for a rebound in growth rates as comps ease and as new supply begins to ramp more closely in line with historical trends later this year,” Govertsen said in his latest industry update.

JP Morgan analysts DS Kim and Sean Zhuang agreed that Macau’s June GGR result remained resilient “considering the slow seasonality post the holiday and negative impact of the World Cup.”

Union Gaming forecast that Macau GGR’s weakness would continue in July, which faces the toughest comparison of the year after growing 29.2 percent in July 2017, as well as an unfavorable calendar with one fewer Sunday.

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Japan residents take casino crash course ahead of IR opening


A growing number of residents in Japan have been enrolling in casino schools in anticipation of the country’s anticipated opening of integrated resorts.

Japan residents take casino crash course ahead of IR openingThe Agence France Presse reported that Japanese casino schools have seen a meteoric rise in the number of enrollees wanting to learn how to deal baccarat games, spin roulette wheels and supervise betting on green baize tables. Casino school owner Masayoshi Oiwane pointed out that more Japanese are hoping to land a job in the lucrative gambling industry based on the “unprecedented level of enrollment momentum.”

In pitching for the passage of the Integrated Resorts Implementation Bill (IR Bill), Japanese Prime Minister Shinzo Abe argued that the integrated resorts will help attract foreign investments, which, in turn, will boost the country’s economy.

The opening of casino resorts in Japan will also create new employment and culture, fueling the country’s international competitive power, according to Abe.

Gaming analysts estimated that the Japanese casino market could be worth $15.8 billion, larger than Las Vegas’ $11 billion market. International credit-debt watcher Fitch Ratings gave a more conservative valuation of $6 billion for Japan’s potential annual gaming revenues.

Japanese casino expert Toru Mihara estimated tens of thousands of jobs will be created even if the government decides to allow just a single brick-and-mortar facility in the country. Aside from gaming, Mihara believes that Japanese government should pursue conference and exhibition businesses.

“Tourists will come to energize various regions. This can grow as a new and major industry,” Mihara said, according to the news outlet.

On Tuesday, the lower chamber of the Japanese Diet made history when it approved the IR Bill. In a nutshell, the bill paves the way for the construction of casinos in up to three locations in the country. The bill also limits Japanese residents from entering casinos by imposing a ¥6,000 (US$54) entrance fee and by setting a maximum of three casino visits per week and 10 visits per month for locals.

The IR Bill is now on its way to the House of Councillors, despite continued strong public opposition to casinos.

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William Shen: Integrated resorts add dimensions to non-gaming entertainment


In this interview with CalvinAyre.com’s Stephanie Tower, Caesars Entertainment Senior Vice President William Shen discusses the unique opportunities that the casino operator sees in Japan.

The Japanese Diet’s lower house is set to make a vote on the Integrated Resorts (IR) Implementation Bill on June 12. The vote was initially scheduled for earlier in June but lawmakers moved it on a later date to give way to Niigata gubernatorial elections.

Major casino operators have been jostling for pole position in the Japanese market, courting both local partners and venue hosts even before the IR Bill was submitted to the Diet in May.

Japan’s vast opportunities have excited major casino operators seeking a slice of the country’s gambling pie, according to Caesars Entertainment’s Senior Vice President William Shen.

“Japan has enormous opportunity and IRs can only be built upon it because the existing attraction has already brought appeal, whether it is cultural or the arts, as mentioned earlier, the shopping, the food,” Shen told CalvinAyre.com. “IRs add additional dimension both on the conference and convention side but also from a non-gaming, broad-based entertainment side.”

Gaming analysts estimate that the Japanese gambling market could be worth as much as $40 billion annually. Japan also welcomed a record 24 million tourists in 2017.

Japan is also seen as a more viable option for many casino operators affected by the Chinese government’s crackdown on corruption and currency outflows in recent years.

However, Japan might only issue two casino licenses after its broad regulatory framework is passed. Shen believes that Caesars may succeed in securing one of these licenses since it offers multi-faceted entertainment opportunities for guests around the world.

In Las Vegas, Caesars currently has nine integrated resorts, which offer a variety of shows, not only the so-called headliners but also magic shows and family friendly shows, according to Shen.

“Japan is one of the places where the theme parks are the most popular and the most successful in the world. So IRs, this location-based entertainment model that we have to offer, we believe, will be very successful there as well,” the Caesars executive said. “We have lots to offer on the F&B side, the food and beverage, restaurants with celebrity chefs, but also the shopping, and the spa, and the golf courses. So, that’s the type of thing we want to be able to bring to markets internationally as we expand.”

He also allayed fears of that opening casinos in Japan will be bad for the residents of the country, saying that integrated resorts bring huge value in terms of job creation, tourism attraction, tax benefits and investment.

“I think that story needs to get out there more. This is a real track record that we possess in this industry and as it relates to casinos itself, there’s actually decades of responsible gaming leadership that we have exhibited in each market that we operate in, where we try to do the right thing by our guests all the time,” Shen said. “These are the types of things that as we go through this processes I think, people would come to better understand with some more effort of course on the part of the industry but also on the part of the public leadership as well.”

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Las Vegas Union strike is much ado about nothing


Caesars having just reached a labor deal with the Culinary Workers Union (CWU), it’s a good time to talk about labor unions and how irrelevant they have become. Unions have been a dying breed since the 1950’s, when the percentage of unionized labor in the United States reached a high of 35%. We’re now at around 10.7%. Most union workers get their salaries from taxpayers. 34.4% of unionized workers are government bureaucrats.

Las Vegas Union Strike is Much Ado About NothingOnly 6.5% of the private economy is unionized, and it’s only that high because unions are protected by the federal government. They are actually allowed to commit violence against employers on a federal level, like when they strike and threaten or engage in violence against scabs and strike breakers, damage or destroy the employer’s property or even, in some cases, actually, literally, kill people. The 1973 Supreme Court decision U.S. v Enmons established that union violence against employers, including homicide, is not punishable by federal law if committed for the sake of wages or benefits. It’s still punishable by state law, but not all states actually go after instigators because it is politically unpopular. The Freedom from Union Violence Act proposed in 2007 to criminalize union violence on a federal level failed to pass. It would have prohibited obstruction of commerce, in other words picketing. Unions did not like that idea and lobbied successfully against it.

One of the last great bastions of unionized labor in the private sector in the US is on the Las Vegas Strip. “Great bastion” though is a misnomer, because while the Culinary Workers Union is the largest private sector union in the country in a Right to Work state with 60,000 members, it doesn’t have much that much power anymore.

The strike that the CWU is threatening the strip with is largely irrelevant. It will cause minor disruptions at worst if it happens, but that’s about it. No union, at least no private sector union, has the power to raise wages above market rates. They pretend that they can because that’s their whole selling point, but just like they can’t break the laws of physics, they can’t break the laws of economics either. If their demands are too high, they will lose whatever power they have left. They’re pinned down by supply and demand just like everyone else in the private economy is.

One way to demonstrate this is to look at unionized versus nonunionized (or relatively less unionized) casino labor costs. MGM currently has 70% of its employees covered by collective bargaining agreements. Standard, general, and administrative expenses comprise 18% of top line revenues for 2017. Boyd on the other hand has 19,707 employees, 1,811 of which are unionized. That’s about 9% of its work force, slightly more than a tenth the proportion of union labor that MGM has. Boyd’s SG&A expenses are still about the same as MGM’s proportionately at 19% of top line revenues. If union labor were so much more expensive, you’d expect MGM to have higher labor costs than Boyd, but that’s not the case.

This is just one data point, but that aside, if there were any drastic differences between union and non union labor costs, MGM would not rely so heavily on the CWU for its labor. Why do they? Probably because it’s easier logistically to just hire the CWU to take care of menial labor rather than spend resources headhunting for individual workers. Whatever savings MGM has from not having to find all these culinary and janitorial workers themselves, they can spend on slightly higher salaries, but it’s not like any private sector union grants amazing benefits to workers. If that were true, more people would join unions.

In the public sector it’s different, and unions have more negotiating power because there are no market wage rates. Plus, in the public sector, unions are working for their protectors, the government itself, so they are more or less on the same page. They clamor for what they think they can extort from taxpayers and then get the rest from government borrowing or inflation. It’s no coincidence that US states with the highest percentage of unionized labor like Illinois, New Jersey, Massachusetts, California and Connecticut, also have the worst public finances and unfunded public pension liabilities.

There is something really ironic though, call it poetic justice, about this particular strike threat. That is, automation is one of the chief complaints of the CWU. To quote my hometown newspaper The Miami Herald, union workers fear they will be replaced by robots, and that’s one of the reasons why they’re striking. Why will they be replacedLas Vegas Union Strike is Much Ado About Nothing by robots? Partly because the advance of technology makes automation cheaper compared to human labor costs, but one factor that speeds this process up is minimum wage laws. Minimum wage prices low-productivity workers out of the workforce faster than otherwise in favor of cheaper automated labor. It’s happening at fast food joints in New York City where $15 minimum wage laws are going into effect, for example.

Here’s the ironic part though. Who is the greatest advocate for minimum wage laws in the United States? Labor unions. Labor unions are always in favor of higher minimum wage laws because they help price out competition from non-union labor. If an independent worker cannot by law work below a certain wage, then de facto he is unable to undercut union wage rates, keeping unions in power. This is less of a problem now than it was back in the 30’s through 50’s when unions were much more popular and powerful and helped exacerbate the unemployment epidemic of that era. Now, unions are reaping what they sow, getting a taste of their own minimum wage medicine, and fear getting replaced by automation.

So this strike threat is really much ado about nothing. It’ll create temporary disruptions at worst, but threatening or actually pulling off a strike is all part of negotiating strategy. Eventually it will be settled. Hopefully though, if there is a strike, no property will be destroyed and union instigators won’t hurt or kill anybody, despite federal level protections by the Supreme Court, which looks out for our constitutional rights.

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The saga continues: Elaine Wynn sues Wynn Resorts


This really shouldn’t be a shocker to anyone. Ahead of Wynn Resorts’ annual general meeting, scheduled to be held this month, Elaine Wynn has decided to sue the company for not releasing its shareholder records.

The saga continues: Elaine Wynn sues Wynn ResortsWynn, who became the largest shareholder after her ex-husband, Steve Wynn, resigned from the company, filed the suit in Nevada. She is hoping to get the courts to obligate the company to release all shareholder material to which she is legally entitled. The suit also requests that the annual meeting be postponed until the lawsuit is settled.

According to Nevada law, Elaine Wynn is entitled to see the names, contact information and number of shares owned by each common stock owner of the company, provided the individual has authorized the release of the information. A representative for Wynn stated, “Providing the NOBO [non-objecting beneficial owner] list is standard practice under Delaware law and both federal and state courts have ruled that shareholders of a Nevada corporation are entitled to the list.”

The representative added, “Ms [sic] Wynn believes that the requested NOBO list is in the company’s possession and would not require the company to expend additional time or cost to produce. Moreover, she believes that the company is actively using this very list to communicate directly with Wynn Resorts’ shareholders—something Ms [sic] Wynn is unable to do, even though she is the company’s largest shareholder.”

Elaine Wynn recently started a campaign to have the current company’s director, John J Hagenbuch, removed at the end of his term this month. She sent a letter to all shareholders, requesting that they join her “Withhold the vote” campaign, in an effort to remove some of the “legacy directors from the board.

About Hagenbuch, Wynn stated in the letter, “He was on the compensation committee when Mr [sic] Wynn’s pay was called into question in 2015,” adding that, “The company did not hold a say-on-pay vote in 2015 or 2016 and at last year’s annual meeting, the say-on-pay proposal received only 59% support. This puts the company in the lowest 10% of Russell 3000 companies holding say-on-pay votes in 2017.”

There’s no love lost between Elaine Wynn and the current board of directors. The disdain on both sides of the table is evident; however, as a majority shareholder, she has a strong chance of being able to get her way. The ongoing saga continues, so stay tuned for next week’s exciting episode.

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Wynn Resorts strips Wynn name from Boston Harbor project


wynn-resorts-encore-boston-harbor-casinoCasino operator Wynn Resorts is renaming its half-finished Massachusetts casino project to further distance itself from its former chairman’s sexual harassment allegations.

On Friday, Wynn CEO Steve Maddox met with members of the Massachusetts Gaming Commission (MGC) to discuss removing Wynn Resorts founder Steve Wynn’s name from the gaming license of the $2.4b Wynn Boston Harbor resort casino project in Everett, just north of Boston, which is scheduled to open in June 2019.

Wynn Resorts suggested in March that a rebrand of the property was likely. At Friday’s hearing, Maddox announced that the property would now be known as Encore Boston Harbor. Encore is the name of a resort property that opened in 2008 as the second phase of the Wynn Las Vegas resort.

Maddox told the MGC members that while “the Wynn brand is strong,’ he also understood “the cultural sensitivity” surrounding the numerous harassment allegations brought against Steve Wynn this year by female staff members.

Steve resigned in February and has sold off his entire holdings in the casino company. Maddox told the MGC that the company now had “no business association with Steve Wynn,” yet this separation, whether in terms of business and branding, may not be enough to ensure the company retains control over the Everett project.

The MGC hope to make a ruling on removing Steve’s name from the gaming license next week, but that’s a separate issue from the ongoing probe the MGC is conducting into how much Wynn’s senior management knew about the allegations against their former leader. Should the MGC not like what its probe uncovers, it could declare Wynn Resorts unsuitable to operate gaming in Massachusetts.

Should that worst-case scenario play out, it’s unknown who might take over the unfinished Everett project. On Thursday, rival MGM Resorts, which is opening its own Massachusetts casino this August, played down reports that it was planning on swapping projects, insisting it was committed to its own MGM Springfield project.

The Mohegan Tribe, whose casino properties include the Mohegan Sun in Connecticut and which unsuccessfully vied for the sole Boston-area casino license that Wynn received, told The Day that it remained interested in setting up shop in Boston, should that sole license go back on the market.

However, the MMCT Joint Venture between the Mohegans and the Mashantucket Pequot Tribal Nation that is building a casino in northern Connecticut close to MGM Springfield, shot down media reports that it would be interested in taking over the Springfield property should MGM take over the Everett project. An MMCT spokesperson called such reports “rumor mill trash.”

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Japanese regulators lower casino chip exchange reporting requirements


Governments around the globe have taken a serious interest in trying to curtail the amount of money laundering that is supposedly plaguing the gaming industry. Canada and British Columbia have been busily enacting legislation to prevent repeats of the negative publicity surrounding questionable activity at the River Rock Casino, and the U.S., the UK and Australia have also been exploring changes in policies to help clean up the system. Japan is now joining the fight, and recently ordered changes in reporting guidelines at casinos in the country.

Japanese regulators lower casino chip exchange reporting requirementsOperators of future casinos in Japan will be obligated to report customers who exchange chips worth $9,500 (¥1 million) or more. Regulators are responding to concerns that the casinos will be havens for the exchange of “dirty money” that is used for money laundering or financing terrorism. The new casinos are slated to be opened in integrated resorts in an effort to bring in more international tourism to the island nation.

Anyone who buys or cashes chips worth $9,500 or more will have to provide their name, address and birth date to casino operators. This information will then be turned over to a casino management committee, which will be created at a later date by the government. That entity will catalog the data and investigate any instances that raise flags, such as repeated high-dollar exchanges.

Japan isn’t the first country to introduce these money-laundering countermeasures. In the U.S., Nevada regulators require that casinos follow the same guidelines, and in Singapore the amount is less, at roughly $7,600. Macau has also placed restrictions on exchanges, with Large-Amount Transaction Reports being required for exchanges by junkets of more than around $62,000. Suspicious Transaction Reports are more vague, and are required for any transaction that is thought to be associated with money laundering.

Money laundering is big business. In 2012, a report by the World Bank and the International Monetary Fund (IMF) estimated that money-laundering activities amounted to as much as $3.6 trillion per year. That report brought about changes to multiple industries, including gambling, corporate reporting and banking.

Japan is set to re-enter the gambling market with the new casinos. Almost all forms of gambling, except pachinko and horseracing, have been prohibited. However, a change of heart by the Japanese parliament has opened the doors for casinos to enter the country. If everything goes according to plan, Japan anticipates an increase in tourism that jumps by 16 million visitors by the year 2020, up from the 24 million recorded in 2016.

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Resorts World Catskills moves up launch date; del Lago downgrade


resorts-world-catskills-casinoNew York state’s newest casino Resorts World Catskills is moving up its launch date to coincide with the Chinese Lunar New Year celebration.

On Thursday, Montreign Operating Co LLC, a subsidiary of Empire Resorts Inc, which is itself controlled by Malaysian conglomerate Genting, announced it was moving up the grand opening of Resorts World Catskills from March 1 to February 8 (pending regulatory approval).

The casino has decided it wants to time its opening with the arrival of the Chinese Year of the Dog, which officially gets underway on February 16. The Catskills venue is located 90 miles north of New York City, and the venue evidently hopes to lure many of the Big Apple’s Chinese ex-pat community as well as any high-rolling international guests who may land at JFK.

The property’s Lunar New Year plans include a traditional dragon dance and what Resorts World Catskills CEO Ryan Eller called “red envelope surprises,’ while the 100k-square-foot casino floor will devote at least 30% of its space to Asian-centric table games.

If you still had doubts as to what type of clientele the casino hopes to attract, the casino also announced that is official address would be 888 Resorts World Drive. The company noted that, in certain cultures (ahem), three eights symbolize good fortune and prosperity, and the new address is intended to “signify the resort’s anticipated good luck of its future patrons.”

MOODY’S BEARISH ON DEL LAGO’S FUTURE
Resorts World Catskills will be the fourth commercial casino launched since New York approved new non-tribal casinos in 2015. So far, these properties have performed far below their original revenue projections, leading to concerns of market saturation.

Making matters worse, the Oneida Nation plans to open its third gaming venue on March 1, which will bring the state’s total complement of casinos and racinos to 19. The Oneida’s new 65k-square-foot Point Place Casino near Syracuse will feature 500 slots and 20 gaming tables, in addition to restaurant and bar options.

Last week, Moody’s Investors Service cut the outlook of the new del Lago Resort Casino in Finger Lakes to ‘negative,’ based on the $100m shortfall in the venue’s projected first-year revenue.

While Moody’s said it was confident that del Lago could continue to pay the interest on its bank loans for a while longer, “without a substantial improvement in revenue, del Lago will not be able to achieve a level of performance that can support its existing debt capital structure.”

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