Cambodia is the region’s standout winner for 2015, expanding from its Southeast Asia base. Hong Kong listed NagaCorp, owner of NagaWorld in Phnom Penh, has moved into the China mass market and made deals with Macau junket promoters to boost its revenue ahead of next year’s opening of NagaCity Walk and the 2107 debut of Naga 2 that will more than double the resort’s size.

Predictions For 2015 Misread Macau, Vietnam; Right On Okada In Manila, Fung In Australia

 Forbes | 28 December 2015

Opinions expressed by Forbes Contributors are their own.

Fast dwindling 2015 will go down as the year Asia gaming stopped defying the law of gravity. Macau’s gaming revenue fell significantly despite billions in new investment, and other destinations failed to pick up the slack. That’s not the way I called it with my predictions back in January. Here’s a rundown on my prowess with the crystal ball for 2015.

Macau rebound: Last January, I wrote: “…by the fourth quarter, expect Macau’s monthly gaming revenue to be showing double digit growth again.” I repeated that prediction in an interview with Portuguese news agency Lusa in June, following the opening of Galaxy Macau’s Phase 2, which I foresaw as an “inflection point” for gaming revenue. I was dead wrong.

I also said, back in January, that the openings of Galaxy and Melco Crown’s Studio City “will strongly indicate how much of Macau’s current woes are due to the President Xi [Jinping]’s anti-corruption campaign and how much is due to the lack of new resorts to excite visitors. The latter may be a much bigger factor than presumed, especially among mass market players.” What we’ve learned this year is mainland authorities’ increased scrutiny of money transfers and the lack of must-see attractions to supplement casinos are both big factors in Macau’s decline. Ongoing malaise in the mainland economy remains a further headwind.

The late May opening of Galaxy Macau’s Phase 2, Macau’s first new casino project in three years, and Studio City’s October debut, failed to reignite Macau’s revenue growth. (Photo credit: Billy H.C. Kwok/Bloomberg)

Japan casino progress: In January, I wrote: “Prime Minister Shinzo Abe’s casino legalization plans moved backward in 2014. This year, they’ll move forward, though that doesn’t necessarily mean a casino bill will pass the Diet. It could mean that lawmakers revamp the legislative approach to a one vote process or undertake some real studies of the impact of casinos on Japan economy. Don’t bet on casinos by the 2020 Tokyo Olympic Games.” I did a lot better on this forecast than I did on Macau.

Japan didn’t pass casino legislation in 2015 but it did introduce the first phase integrated resorts bill during the spring Diet session, and it did “undertake some real studies” by The Innovation Group, a US-based consultant, even though the government went out of its way to deny it had commissioned the research. Nothing has been revealed about the results of that study. With this year’s failure to approve the first of the two casino bills needed for legalization, Union Gaming Securities Asia declared integrated resorts were a dead issue for 2020, when Tokyo will host the Olympic Games, and unlikely before 2022. Perhaps the biggest indicator of where things stand is that the Japan Gaming Congress scheduled for October was canceled.

Vietnam opens its casinos to nationals: In January, I wrote: “After years of dropping hints, Vietnam’s rulers will declare that citizens are allowed to play in selected casinos on an experimental basis. Accompanying tax changes for the chosen trial site and other restrictions will diminish the impact of the change…” In 2015, Vietnam didn’t issue its casino decree, but it did raise taxes. From January 1, the headline tax rate will rise from 30% to 35%, while the corporate tax on profits will fall from 22% to 20%. Donaco International, which owns Aristo International on Vietnam’s border with China’s Yunnan Province, says the net impact will a rise of 2-3 percentage points in its effective tax rate to 16-17%,. The levy is reduced because Vietnam allows commission costs to be deducted from revenue before assessing taxes.

Even though local play risks becoming the Southeast Asian version of Japan’s casino legalization, a hearty perennial source of speculation, it’s been a positive year for Vietnam gaming, at least on paper. In March, Hong Kong billionaire Cheng Yu-tung’s Chow Tai Fook Enterprises revived the Hoi An South IR project as majority owner, with local investment firm VinaCapital and leading Macau junket promoter Suncity Group as partners. Silver Heritage opened an upgraded resort in Bac Ninh, the closest casino to capital city Hanoi, located in a major foreign manufacturing hub. In recent weeks, Asian Coast Development Ltd, owner of Vietnam’s first IR in Ho Tram, announced it would build a second 550 room hotel tower for The Grand and up; to 900 condo units and villas as well as beefing up its resort offerings.

Kazuo Okada-Pagcor battle ends: In January I wrote: “By this time next year, Philippine regulator Pagcor will have found a way to allow the opening of Entertainment City’s third casino property, Manila Bay Resorts, with or without its principal owner, Universal Gaming chairman Kazuo Okada.” I got this one right, and Okada is still very much in charge.

Okada’s Tiger Resort Leisure and Entertainment found a partner to satisfy the Philippine government’s rule for 60% local ownership of the land for its $2 billion IR and, after forfeiting its 100 million peso (US$2.2 million) performance bond, got its March 31, 2015 completion deadline extended to the end of next year. Investigations into allegations of wrongdoing against Okada and his colleagues that cost him his stake in Wynn Resorts have seemingly fizzled, at least in the Philippines. So expect Manila Bay Resorts to up the ante in Manila by this time next year.

Tony Fung takes a walk from Aquis: In January, I wrote: “Since Queensland officials decided to play hardball on Fung’s acquisition of Reef Casino in Cairns, near the Yorkeys Knob site proposed for his massive Aquis resort, Fung has hinted he’ll take his money and connections elsewhere. He’ll make good on the threat and a desperate Queensland government will come running after him, offering an even sweeter deal for a smaller investment [than the mooted US$6 billion].” I did pretty well on this one, too.

Fung did indeed walk after Queensland authorities blocked his acquisition of Reef. The new Queensland state government elected in January, thought to be more skeptical about IRs than its predecessor, brought Fung back into the fold, with a detailed plan for the massive project due next year. This year, Fung has instead focused on Casino Canberra, which he acquired last year, listing it on the Australian stock market and making plans to expand the facility in the national capital region. Until Chinese VIP play stages a comeback, Aquis will likely remain on the back burner.

Another banner year for Asian gaming: In January, I wrote: “Even though Macau retreated by about $1 billion in 2014, gains in Vietnam, Cambodia and the Philippines probably offset that loss. This year, gaming revenue takes a great leap forward on the back of a Macau recovery and, in Manila, the completion of Entertainment City’s first two resorts.” Another bad miss here. Macau gaming revenue will be down by more than US$13 billion this year. South Korea will also be down. The Philippines will show incremental growth.

Cambodia is the region’s standout winner for 2015, expanding from its Southeast Asia base. Hong Kong listed NagaCorp, owner of NagaWorld in Phnom Penh, has moved into the China mass market and made deals with Macau junket promoters to boost its revenue ahead of next year’s opening of NagaCity Walk and the 2107 debut of Naga 2 that will more than double the resort’s size. Donaco’s acquisition Star Vegas in Poipet, the border casino cluster closest to Bangkok, and its deal with Macau’s Hengsheng Group to bring in VIPs has significantly boosted revenue. It won’t make up for what Macau has lost, though.

Thank you for your readership and participation in 2015. Despite this year’s hits and misses, I’ll give it another try with predictions for 2016. Until then, I wish you and yours a very happy and safe new year.

Hong Kong On Air author Muhammad Cohen is Editor At Large for Inside Asian Gaming. Follow him on Twitter @Muhammad Cohen.