2016年-_ALCUQ~F

Summary: Is Europe Ready for Integrated Resort Casinos?

Core Content

This report explores the potential of Integrated Resort Casinos (IRCs) in Europe, comparing them to successful models in Asia and the US. It evaluates the opportunities, challenges, and risks associated with introducing IRCs in Europe, focusing on the economic, social, and regulatory aspects.

Main Points

What is an Integrated Resort Casino (IRC)?

• An IRC integrates major casinos with hotels, leisure, entertainment, and other facilities.
• It appeals to both gamblers and non-gamblers, including high-spending VIPs.
• The model is large-scale, involving significant investment, job creation, and tax revenue.

Advantages of the IRC Model

• Profitability: IRCs can generate substantial EBITDA, with Singapore’s Marina Bay Sands reporting over $1bn in 2015.
• Diversification: Offers a range of attractions, allowing operators to expand their revenue streams beyond gaming.
• Consumer Appeal: Targets a broad audience, including mass-market tourists and VIPs, and provides a rich experience that enhances the appeal of the destination.
• Economic Impact: Can boost GDP, employment, and public services through tax revenues and ancillary industries.

Key Jurisdictions

• Las Vegas: The birthplace of the IRC model, where gaming revenue has diversified into non-gaming and MICE (Meetings, Incentives, Conferences, Exhibitions) activities.
• Singapore: A late entrant to the IRC scene, with significant success in attracting tourists and increasing their average stay.
• Macau: A long-established gaming hub, now diversifying into leisure and mass-market gaming to counter declining VIP traffic.

Europe's Position

Consumer Demand

• Europe is the third-largest gaming region globally, but the casino market is relatively small and focused on local audiences.
• There is consumer interest in gaming, and the region has the potential to attract both local and international visitors, including high-net-worth individuals (HNWIs) and Asian tourists.

Opportunities for Governments

• Revenue and Jobs: IRCs could generate significant tax revenues, support employment, and attract foreign investment.
• Tourism Growth: Europe has a strong tourism base, and an IRC could enhance its appeal as a destination, especially for Asian visitors.
• Infrastructure Development: IRCs can lead to improvements in public infrastructure, such as airports and roads, through required investments.

Challenges and Barriers

Regulatory and Political Hurdles

• Complex Approval Process: IRCs require extensive and lengthy approval, involving multiple stakeholders and regulatory bodies.
• Government Resistance: Many European governments have been hesitant to adopt the model, citing concerns over social impact and public opinion.
• Examples of Delays:
  • EuroVegas (Spain): Abandoned in 2013 due to regulatory and financial hurdles.
  • BCN World (Spain): Stalled due to lack of consensus among stakeholders.

Operator Reluctance

• Operators are often hesitant to invest in Europe due to the complexity and uncertainty of the regulatory environment.
• Europe is not a top priority for operators, who are more interested in markets like Japan and Macau, which offer higher returns and more favorable conditions.

Market Conditions

• The European casino market is relatively small and less lucrative compared to Asian counterparts.
• The continent is also facing economic and social challenges, such as Brexit and the slowdown in China, which may affect the appeal of IRCs.

Conclusion

• Europe has the potential to benefit from the IRC model, both economically and socially.
• However, the continent lags behind in terms of current IRC developments and may face significant regulatory and political challenges.
• The question remains: is the time right for Europe to embrace the IRC model and capitalize on its opportunities?

Key Figures

• Current number of IRCs in Europe: 0
• Average increase in tourism visits in Singapore post-IRC launch: 40%
• Average EBITDA of an IRC in 2015: $600m
• Macau's GGR in 2015: $28bn (5 times Las Vegas)
• Las Vegas Strip casino space: $3.2m square feet
• Average length of stay in Singapore post-IRC: c.4 days (up from c.3 days)
• Projected growth in HNWIs in Europe: 25% by 2024
• Annual increase in China outbound flights to Europe (2009-2014): 11% (25% for first class)
• EU's regulatory complexity: Seen as a barrier to IRC development

Summary of Risks and Barriers

• Regulatory Complexity: Long and difficult approval processes.
• Political Concerns: Social impact and public opinion may hinder development.
• Operator Reluctance: Lack of confidence due to uncertain regulatory environment.
• Market Competition: Operators have more attractive options in Asia and the US.

Summary of Opportunities

• Economic Growth: Potential for significant GDP, tax, and employment boosts.
• Tourism Expansion: Can attract more international visitors, especially from Asia.
• Diversification: Offers a chance to expand into non-gaming and MICE sectors.
• Infrastructure Development: Can lead to improvements in public services and transport.