DeltaCorp derives 30% of revenues from Gambling / Gaming business. Delta Corp. is engaged in the gaming business with three offshore licenses in Goa (out of the six licenses awarded by the Goa government). These casinos offer a variety of international games like Baccarat, Poker, Roulette, Blackjack, etc. The company operates two out of the three licenses it owns and has an 80% market share in overall offshore gaming market (Source: Company). According to current regulations in Goa, no further offshore licenses will be awarded and this will act as an entry barrier for new players. However, land-based casinos can provide competition; the only compulsory requirement for acquiring a license is that this casino needs to be part of a 5-star hotel.
The current ‘Casino Royale’ vessel will be increasingly positioned as a premium vessel with focus on VIPs, and VVIPs. The company is also foraying into Daman with a 51% stake in the hospitality cum gaming business. Delta Corp aims to be a leading player with one of the largest casino-resort conventions in Daman, expected to launch in May 2012.
Delta currently derives around 60% of its revenues from the real estate business. The company has invested in real estate land parcel in Kenya; it holds a 40% stake in the venture with the balance 60% being held by Reliance Industries. Delta’s residual investment in the venture is INR 80 crs and as per the management, the company is not expecting to increase exposure.
The company is currently trading at 2.5x FY11 book value and has invested capital in anticipation of a break-through in number of visitors. Globally, emerging gaming destinations like Macau ($30 billion) and Singapore ($7billion) are very large markets. Compared to these markets, the Indian market stands at a paltry $30 million, and can possibly be a much bigger market. However, at the same time, high ticket size (average bet sizes closer to INR 50,000) and the country’s general perception of gambling being negative, it would be interesting to see where the Indian gaming business is headed. For now, investing in Delta Corp would represent a play on gaming.
