Q.& A. | I. Nelson Rose

17 October 2008

By Emily D. Swoboda

Some of the world's foremost legal minds will be attending Clarion Gaming's inaugural Asian Gambling Briefing next week, and one of them took a few minutes to discuss with IGamingNews his views on the region's fast-growing markets.

I. Nelson Rose is a professor at Whittier Law School in Costa Mesa, Calif., who specializes in gambling law. Since 2004, Mr. Rose has traveled to the University of Macau every June to teach gambling law as a visiting professor.

Mr. Rose will kick off the Asian Gambling Briefing in Singapore with a look at what factors have contributed to the tremendous boom in the Asian gambling market and what shape it will take in the future.

Mr. Rose shared a few thoughts about what games have proven successful and who gaming companies should be targeting in the Asian region.

What will thrive in Asian gaming? How do companies know what games are going to be successful?

That's a really good question. I think there's a lot of common wisdom about what works and what doesn't work, and it's not always true.

For example, it's been said that Chinese players do not like to play on slot machines (but they) looked at the casinos that were run by Stanley Ho. Well, he hardly had any slot machines, and they were in the dark, dingy corners. And when the Sands opened with its American style casino they put in a few machines just to try them out and people were standing in line to play them.

Now, clearly still (Asia is) a different market. It's high-stakes baccarat games, for example, that make most of the money, not slot machines like American casinos. But machines are being introduced into the Asian market successfully.

Poker is an interesting question. You wouldn't expect someone from mainland China to want to play video poker. How do they even know what video poker is? But computers now come with games on them, even poker, and at least for video poker it's an easy game to learn.

I think still you're going to find games that revolve around the number nine are the most popular, and will remain the most popular.

Can you explain the significance of the number nine?

The number nine, from what I understand, was the emperor's number, and it's a very important number. Pai gow actually means "make nine" in Cantonese and in baccarat the hand that comes closest to nine wins.

So, still, for a long time, card games that revolve around the number nine are going to be the most popular.

Who is the Asian gambling market? Is it strictly locals or tourists, or does it depend on the area?

Well, it depends on the area, but clearly the overwhelming giant that is the "elephant in the room" type of situation is mainland China because mainland China has hundreds of millions of middle-class and above people who can travel.

The one problem that Asia has that no other market that I know of -- certainly no American market that I know of -- is restrictions and regulations not on the operator but on the player.

Imagine if California said: "I'm sorry, Californians can only go to Nevada four times a year." Well, that's what China did with Guangdong province. The province that is nearest Macau -- there is a new law that says residents can only go to Macau four times a year.

So, mainland China is still the major market.

Japan is a very important feeder market. Technically, Japan doesn't have casinos and the Japanese do travel. They go to places like Tinian, in the Commonwealth of the Northern Marianas, which is part of the United States, and they go to Las Vegas.

But you always have two markets; you have the home market and you have the tourist market. What Korea has done -- almost all of their casinos are not open to Koreans and they have not been very successful because they do not have a lot of mainland China tourists coming in.

Macau, of course, has lived off of mainland China, Hong Kong and Taiwan.

Speaking of Macau, have you heard any talk lately of Macau regulating online gambling?

I think one of the questions is: What will the tax rate be? If they tax it too low then that's unfair to the land-based casinos. If they tax it at the same rate as the land-based casinos then they may not get any operators because the operators are simply going to go to a lower-tax jurisdiction.

So, they've got a problem with taxation -- and also of overwhelming importance right now is the regulation of land-based casinos. That's such a high priority that it's hard for them to think about anything else.

I'll give you an analogy. Barney Frank is one person who is absolutely most interested in Internet gambling, right? Well, he's not going to do anything about it right now because he's one of the most important people in Congress when it comes to trying to figure out a way to save the U.S. economy.

Is there anything you are hoping to learn at AGB?

I always learn a lot from these conferences. There's nothing like being there and talking to people who are experts in their own fields, in their own countries, to find out what's really going on. It's one of those "What don't I know and how am I going to find out?" I know I'm going to learn a lot.

Q.& A. | I. Nelson Rose is republished from iGamingNews.com.