IGT hopes to cash in on potential foreign markets

By Liz Benston (contact)

Wednesday, Sept. 18, 2002 | 10:58 a.m.

Southeast Asia has a population of 3 billion, mostly under age 30. It's also home to Macau, a small island off the Chinese coast that's making headlines as a potential boomtown for luxury casino resorts on par with Las Vegas' best.

The region is one of several emerging markets that are welcoming the gaming industry's unprecedented expansion worldwide, panelists at a Global Gaming Expo conference session said Tuesday.

That means big potential returns for a company such as International Game Technology, the world's largest slot machine manufacturer.

Reno-based IGT is eyeing markets such as Macau and Mexico as possibly the next surefire markets to offer new or expanded gambling opportunities.

Macau, a former Portuguese colony controlled by China with an entrenched, virtual monopoly on casinos, is attempting to adopt more stringent regulations and open its economy in the wake of recently announced investments there by Las Vegas casino moguls Steve Wynn and Sheldon Adelson.

Another transformation is also at hand, according to IGT: Macau's transition from a conservative, card game culture to the glitzy, noisy world of slot machines.

The company predicts an influx of about 3,000 to 5,000 slot machines in Macau over the next several years, a demand that will be met by several different manufacturers.

"There are lots of opportunities there for slot manufacturers to create something that's successful," said panelist Scott Fisher of the The Innovation Group, a consulting company for casinos and other leisure industries. Manufacturers will essentially be starting from scratch, as the market now offers few slots that have failed to attract players, Fisher said.

Chinese visitors to Las Vegas gravitate toward slot machines, a sign that potential demand for the novelty devices in Macau is strong, said Paulus Karskens, president of IGT's international division and a panelist at Tuesday's session.

Meanwhile, the Mexican government has been working since 1999 to draft regulations to legalize gambling, panelists said.

Karskens said IGT is "optimistic" that legislation will be drafted by the end of the year, which could mean that Mexico will be faster to open up than Macau.

"The indications are ... that it is closer than ever," he said.

Karskens wasn't able to quantify the revenue potential for either Macau or Mexico Tuesday.

Other gaming industry opportunities span the globe, from Belize to Switzerland, panelists said.

Some regions are safer bets than others. While the United Kingdom is pursuing plans to draft legislation that could open the country to Las Vegas-style casinos, Australia's entrenched New South Wales market is considering rules that would scale back its gambling activities.

Others are approaching casino-style gambling for the first time. Those markets include the Taiwanese island of Penghu; Pattaya, Thailand; Jakarta, Indonesia; Hawaii's island of Oahu; and the Japanese cities of Okinawa, Osaka and Tokyo. While some governments have expressed initial support for gambling, local sentiment on the issue, in some cases, has yet to be determined, Fisher said.