At a recent meeting with Nevada regulators, Konami Group Chairman Higashio Kimihiko expressed confidence that the gaming industry has fully bounced back from the setbacks caused by the pandemic. Appearing before the Nevada Gaming Control Board (NGCB), Kimihiko underscored the industry’s robust recovery and outlined Konami’s role in adapting to post-pandemic challenges.

Konami’s Kimihiko Touts Company’s Strength at Nevada Regulator Hearing

Kimihiko, who has been at the helm of Konami since 2020, addressed the NGCB through an interpreter. He acknowledged the impact of the pandemic but emphasized that the market has regained its strength, reported CDC Gaming. He was last approved for licensing by Nevada regulators in 2013, and this recent appearance was part of a routine licensing process. The NGCB’s recommendation for approval will advance to the Nevada Gaming Commission for final consideration later this month.

In his discussion with NGCB Chairman Kirk Hendrick, Kimihiko supported the state’s efforts to accelerate the introduction of gaming products to the market. Hendrick highlighted the state’s commitment to aiding companies in swiftly delivering new technologies to customers, a sentiment that Kimihiko endorsed.

NGCB member George Assad praised Kimihiko’s impressive background, noting his progression within Konami from an engineering MBA graduate to his current leadership position.

NGCB Approves Caesars Entertainment’s CIO Rajendran Anbalagan

During the same meeting, the NGCB also reviewed and recommended the approval of Rajendran Anbalagan as the chief information and product transformation officer for Caesars Entertainment. Anbalagan, who took on this role 11 months ago, has a background in digital and technology roles, including a stint at Panera Bread as senior vice president.

Despite his limited experience in the gaming industry, Anbalagan described himself as a “computer geek” who is eager to tackle the challenges of his new position. He addressed the cybersecurity incident that Caesars experienced last fall, assuring the NGCB that the company has been proactive in strengthening its defenses. Anbalagan detailed how Caesars has increased collaboration with cybersecurity partners and hired a new chief information security officer to enhance their protective measures.

Hendrick echoed the importance of cybersecurity, noting that the NGCB itself faced a cyberattack in January. He emphasized the government’s commitment to safeguarding its systems and praised Anbalagan for his efforts to protect customer and employee information.

Anbalagan also touched on his role in product transformation, emphasizing the need for a seamless guest experience through advanced technology. Board member Brittnie Watkins commended his hands-on approach and looked forward to the innovations he would bring to the industry.

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The Investors Service of the credit rating agency Moody’s has upgraded the credit rating of Melco Resorts & Entertainment, a major Asian casino company. Previously negative, the company’s rating has now been updated to Ba3, signifying its improving stability.

The update comes in the wake of the publishing of the quarterly results of Melco’s City of Dreams operator brand. The Q3 results of City of Dreams were positively impacted by the favorable conditions in the special administrative region of Macau, which continues to recover from the pandemic.

The recovery of the local market also meant an uptake in business. An uptake in the VIP segment suggests that its GGR may return to 36% of the 2019 level by 2024. The current tailwind is exactly what led Moody’s to improve Melco’s rating, Gloria Tsuen, a Moody’s vice president and senior credit officer, confirmed.

According to Tsuen, Melco’s financial leverage should improve “significantly” over the upcoming 12-18 months.

Melco Needs to Work Harder to Reach Investment-Grade Rating

Despite its favorable outlook, Melco is yet to fully recover from the effects of the pandemic and China’s Zero-COVID policy. 2022 saw the company lose a whopping $100 million and face significant business and financial challenges. However, the company is optimistic that 2023 and 2024 will be where it turns things around.

The Asian casino giant expects EBITDA to increase to $900 by the end of the current year and to $1.4 million in 2024.

Tsuen added that a factor her team considered when improving Melco’s rating was its $1.2 billion in cash, which the company can use to address its liabilities. In addition, Tsuen pointed out to Melco’s impressive Macau portfolio which poises the company for quick recovery.

However, Melco will need to demonstrate better results if its rating is to be improved further. Going beyond the serviceable Ba3 result and reaching investment-grade will be a matter of bolstering the company’s EBITDA to at least 4.5x-5x.

However, the reverse is also possible, Moody’s warned, noting that Melco’s rating might be lowered if its adjusted EBITDA returns to 5.5x-6x or if the company’s liquidity weakens. These theoretical factors could potentially impede the company’s recovery and make it unable to reduce debt.

Moody’s isn’t the only agency that trusts in Melco’s ability to recover. Earlier this year, Credit Suisse raised the rating of Melco Resorts to buy, because of a variety of positive catalysts. The better-than-expected recovery in Macau was also Credit Suisse’s reason to improve Melco’s outlook.  

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Three and a half years ago, the global COVID-19 pandemic impacted nearly all industries across the globe. The entertainment, hospitality and gambling sectors weren’t spared, and tribal and commercial casinos across the US endured temporary restrictions, including closures. Despite the huge impact of the pandemic on the gaming and hospitality sector, visitation is gradually returning to normal in gaming and entertainment hubs such as Las Vegas.

With the increase in traveling and removal of restrictions over the last two years, Las Vegas has started its recovery as companies seek to surpass financial figures recorded before the pandemic. Judging by a recent report, the global business travel industry is on the right track. Considering an increase in business travel is observed, it is safe to say that Las Vegas operators may also be able to start seeing benefits soon.

The recent report, published by the Global Business Travel Association (GBTA) in partnership with Visa, was titled “2023 GBTA Business Travel Index Outlook – Annual Global Report and Forecast,” and reveals important trends and predictions regarding the global business travel industry. Undoubtedly, this report is relevant for entertainment and gambling operators in Las Vegas, and on the Strip in particular, that offer business amenities such as convention and exhibition spaces.

Rebound of Business Travel Is Faster than Expected

According to the recent report, the global business travel industry has rebounded faster than anticipated. “The global business travel industry has rebounded at a more accelerated rate than expected just a year ago and is now expected to surpass its pre-pandemic spending level of $1.4 trillion in 2024 − and grow to nearly $1.8 trillion by 2027,” explains the new report.

Last year, global business travel spending increased to $1.03 trillion, up by 47%. The positive trend materialized this year as well, with growth expected to reach some 32%. Per the recent report, the positive results come amid an increase in demand after the pandemic and “more favorable global economic conditions in 2022 and 2023 and recession risks that have yet to happen.”

GBTA’s report revealed that business travel recovery recorded different values depending on the region. While Western Europe saw the biggest uptick in 2022, Latin America and North America have been growing their spending significantly too.

“The headwinds that were anticipated to impact the rebound of global business travel over the past year didn’t materialize and that is good news.“

Suzanne Neufang, CEO at GBTA

Suzanne Neufang, GBTA’s CEO, revealed that the challenges that were expected to impact global business travel didn’t happen, which was a good sign. She added the report points to an accelerated return to business travel spending to pre-pandemic levels. Moreover, Neufang predicted further growth for the business travel industry in the next few years.

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Gaming in Macau continued to recover in May but is still far below the pre-pandemic levels according to the monthly report by the Gaming Inspection and Coordination Bureau (DICJ).

2023 Upward Industry Trend Continues

The agency overseeing the gaming market in the Special Administrative Region (SAR) of China revealed that in May gambling operators registered gross gaming revenue (GGR) of MOP$ 15.57 billion ($1.92 billion), an increase of 366% compared to MOP$ 3.34 billion ($413 million) in May 2022.

The May GGR is 5.73% up to MOP$ 14.72 billion ($1.82 billion) registered by the market in April, confirming the market upward trend from February but the rate of sequential monthly increase continued to decrease.

GGR for the first five months of 2023 amounted to MOP$ 64.93 billion ($8.02 billion), which compared to the amount registered in the same five-month period in the year prior (MOP$ 23.79 billion ($2.94 billion)) represents an increase of 173%.

GGR in May 2023 is down 40% compared to the pre-pandemic level of MOP$ 25.95 billion ($3.21 billion) registered in May 2019, while the cumulative figure is down 48.3% from MOP$ 125.69 billion ($15.53 billion), suggesting that the market is still far from reaching the point from which it began descending.

The May GGR figure was also positively influenced by the “May Day” Golden Week holiday period at the start of the month during which international visitations reached almost half a million, bringing hotel occupancy rates to 85%.

Lifting the Restrictions Raised Optimism

After seeing the gambling industry plunge by 50% in 2022 and the New Year’s holiday visitations disappoint, the Macau government removed quarantine requirements for inbound travels to the SAR for all nationalities starting from January 8, allowing visitations from mainland China to resume. Testing requirements for visitors from mainland China, Hong Kong and Taiwan were also lifted.

The effect of the measures was seen almost immediately and the market registered an increase of 82.5% in January GGR, stirring optimism among investors that the industry is on a path to recovery. Later in February, Morgan Stanley issued a note, revising upwards its 2023 GGR and EBITDA estimates.

Macau’s chief executive Ho Iat Seng was even more bullish than investment banks, claiming that the gaming industry in the SAR could easily achieve MOP$ 130 billion ($16 billion) in 2023 GGR, confident of the continuing recovery in the year and beyond.

AGA’s president and chief executive officer Bill Miller was the latest to express his optimism about the gaming industry recovery in Macau. Speaking at the three-day G2E Asia in Singapore, Miller pointed to the SAR, the Philippines and Singapore as examples of strong recovering markets in this part of the world.

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In mid-April, the operations of the major Canadian gaming and entertainment company, Gateway Casinos, were impacted by a cyberattack. The company announced an emergency shutdown on April 16 which at the time was described as a “system-wide malfunction.” In light of the security breach, Gateway decided to temporarily shut down the operations at all of its 14 different properties.

Reportedly, there were more than a few properties affected by the cyber-attack that include venues at Woodstock, Thunder Bay, Sudbury and Sault Ste. Marie cities. Additionally, the ransomware attacks are believed to have affected the operations of casinos in Sarnia, North Bay, London, Innisfil and Clinton. Although five other venues were not impacted by the cyberattack, Gateway temporarily halted the operations at those casinos as well.

Carmi Levy, an experienced technology analyst explained that Gateway may face challenges when recovering from the cyberattack. The analyst, who was interviewed by CTVNews recently, explained that the operator will have to first “own” the cyberattack and then begin the hard work related to recovering from its devastating impact. Additionally, Levy said that Gateway would need to reestablish the trust of its stakeholders, as well as customers.

“Gateway Casinos is going to have to own this, and they are going to have to work hard to reestablish the trust of customers and other stakeholders who have done business with them in the past who may be hesitant to do so going forward, for good reason.“

Carmi Levy, Technology Analyst

The Company Started Reopening Venues

According to the technology analyst, to prevent and recognize cyberattacks, companies need to train their employees better. Levy said that usually, such attacks start with a “phishing type of message” showing in one’s inbox. He explained: “Clearly, someone clicked on the wrong thing in this event. Clearly, someone is going to click on the wrong thing in future events.”

Speaking about cyberattacks, Levy said that it may take years for companies to recover from such threats. He said that cyberattacks are “as bad as it gets” and pointed out that the recovery from such threats isn’t as simple as coming back online by flipping a switch.

Last week, Gateway confirmed it continues to work on its IT systems to reopen its properties. “We continue to restore our IT systems and are working to safely reopen our Ontario operations,” the company explained in a statement. On Saturday, Gateway confirmed the reopening of its Innisfil property. At the time, the company unveiled that it plans to implement a phased reopening plan for its businesses. Gateway confirmed that additional properties are expected to reopen soon.

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