Notes

Cracking the slot machine market -- Chinese style
SHANGHAI Macau passed Las Vegas as a casino market years ago thanks especially to its flourishing baccarat tables. Macau's slot market, on the other hand, still lags behind that of its American counterpart.

Tony Payne, a pensiunan of the U.S. slot machine industry, decided the masalah might be that Macau's slots were not designed for the local market. "We thought that we could do better," he said.

Ten years ago, Payne and American software engineer Justin Nguyen, both of whom previously worked for U.S. machine startup Silicon Gaming, began designing and building slot machines in Shanghai for their new company, Aspect Gaming. They raised about $18 million from China-focused venture capital fund GSR Ventures and other investors and recruited staff from rival Aristocrat Leisure as well as eBay, Google and Alibaba Grup Holding.

"The goal was to start developing games specifically for the Chinese players in Macau," said Payne, now the chief executive.

Shanghai might seem an unusual operating base for a slot machine company. Gambling in general is illegal in China, but units that resemble slot machines, known as video lottery terminals, have been deployed by the country's two state-run lottery networks.
FOOT IN THE DOOR Aspect has yet to make a major dent in the Macau market, however. The local government counted 13,826 gambling machines in operation as of Dec. 31; only around 100 came from Aspect, according to Payne. His customers include Galaxy Entertainment Grup which deploys them at its flagship Galaxy Macau casino. Units have also been sold to MGM China, Melco Resorts & Entertainment, Wynn Macau and SJM Holdings.

The top seven players in the Macau gambling machine market held 90% of sector revenues as of 2015, according to a draft prospectus for a Hong Kong stock offering by machine supplier Asia Pioneer Entertainment Holdings. The dominant machine supplier in Macau, identified elsewhere as Australia's Aristocrat Leisure, held a third of the market.

"Understandably a lot of casino operators want to go with something that they know will work," Payne said. "That's been a challenge for us."


The bigger players are able to leverage their existing relationships with casino operators. A proven record of mass production with stable quality is a key advantage, Asia Pioneer noted.

"It is especially difficult for new entrants to enter into the business without sufficient tunai flow to build production capacity," Asia Pioneer's draft prospectus said. It noted the average price of gambling machines sold in Macau in 2015 was $12,500 per station and counted the sale of 2,906 gambling stations that year.

Macau does not allow "revenue Sharing -- where the supplier retains ownership and takes a sharing of the winnings -- which can sometimes make it easier for a maker to get its foot in the door.

"Getting a new slot product on the floor from an untested and unproven manufacturer is difficult," said Andrew Klebanow, a Las Vegas-based senior partner at consultancy Terbuka Market Advisors.

Revenue share is allowed in Cambodia and the Philippines. daun123 Aspect has successfully placed machines with Nagacorp's NagaWorld casino in Phnom Penh and Bloomberry Resorts' Solaire Casino in Manila.

FOLK TALES One of Aspect's most popular games is "Backyard Gold," which is based on a Chinese folk story about a foolish farmer who finds a hoard of gold, buries it in the ground with a notice saying, "There's no gold here." Other designs revolve around the Chinese zodiac or Hong Kong celebrities.

My Website: https://daun123ar.com/