MACAO: Harrah's Entertainment Inc, the world's largest casino operator, is contemplating expansion to Taiwan and Japan, to capitalize on opportunities presented by the fast-growing and affluent Asia market.

Harrah's, which was taken private in a 2008 leveraged buyout, has remained aloof from the Asian market thus far, leaving the field open to US rivals, Las Vegas Sands, MGM Mirage Inc and Wynn Resorts Ltd. The three major casino operators have invested billions of dollars in the Asian market and are earning rich returns.

Harrah's however is projecting that a "significant portion" of its revenue will come from Asia within the next 10-15 years, depending on government liberalisation of local gaming laws, Michael Chen, Harrah's president for Asia, said yesterday.

"Asia remains highly underpenetrated as a market for gaming. There is enormous upside," Chen told Reuters on the sidelines of a gaming show in Macao.

Asia has roughly 100 casinos, far less than the United States, which has more than 800, he added.

Taiwan's huge and wealthy population, as well as gamblers from Japan and the mainland, would drive growth for Taiwan's casinos if and when they were built, Chen said.

After years of talk, Taiwan's legislature voted to legalise gambling in January, but limited the opening to several offshore islands in efforts to boost tourism and speed up economic development there.

Progress has been slower in Japan where liberalization of gaming laws has met with public opposition.

"In our industry, liberalisation is measured in decades, so it's highly unpredictable," Chen said, when pressed on a timeframe for Harrah's expansion in Asia.

But any near-term expansion for the casino operator is likely to be difficult. Like its rivals, including Sands and MGM, Harrah's has struggled to meet debt costs amid a credit crunch and the global economic downturn.

Despite a lack of casinos in Macao, which has overtaken the Las Vegas Strip as the world's biggest gambling resort based on revenue, Harrah's is interested in Macao over the long term, Chen said.

In 2002, Harrah's decided not to bid for a gaming license when the Macao government opened up the market to foreign casino operators. At the time, Harrah's believed regulators in the 14 jurisdictions where it operated would not permit the company to run casinos in Macao, Chen said.

While Harrah's has no casinos in Macao, the company paid $577.7 million in 2007 for a 70.8-hectare golf course on the Cotai Strip.

Foreign casino operators Sands and MGM, and Macao companies including Stanley Ho's SJM Holdings and Melco Crown Entertainment are among the companies holding Macao's six gaming licenses.

"The government has been very clear that there will be no additional licences," Chen said. "Things have a tendency to change, there might be an opportunity for us."

If Taiwan moves ahead with its plan to legalise casinos, gaming developments would be smaller in size and scope because of their locations, Chen said, adding that they "would not be large enough to satisfy a $5 billion investment".

Casinos in Japan's major metropolitan cities such as Tokyo and Osaka would probably have large-scale entertainment facilities, while those in Taiwan would have golf courses or beach-related attractions, he said.

Harrah's could team up with local partners, including real estate developers, banks and media companies in entering these Asian markets, Chen said.

In 2006, Harrah's lost a bid to Sands to build a new casino resort in Singapore's Marina Bay, which is expected to be ready by late 2009 or early 2010.

Reuters

(HK Edition 06/03/2009 page2)