Focus Gaming News analyses the future of the gaming industry in Macau.
Macau.- After almost two years seriously impacted by the Covid-19 pandemic, Macau began 2022 ready to introduce a series of changes intended to strengthen its economy, which has been highly dependent on tourism and gambling. In January, the government announced amendments to the gaming regulatory framework following four public consultations held between October 22 and 25, 2021.
In the time in between, the gaming industry felt the shock of the arrests of Alvin Chau Cheok Wa, former CEO of Suncity Group Holdings, and of Levo Chan Weng Linth, the former CEO of Macau Legend and chairman of Tak Chun Group. But although this all gives the impression of sudden and dramatic change, Macau has actually been changing for the best part of a decade.
The junket sector, for example, has been consolidating since 2013. Suncity benefited from this consolidation and may have been responsible for almost half of the junket business in Macau before the pandemic. At the start of 2022, Macau’s regulator listed just 42 companies licenced for gaming promotion compared to more than 200 in 2013.
In turn, the casinos have earned a diminishing share of their revenues from VIP customers. VIPs contributed 80 per cent of baccarat revenues in 2011. In Q4 2019, before the pandemic, that had fallen to 51 per cent. It was just 29 per cent in Q4 2021.
Due to this situation, casinos have been adapting their models to reflect the changing situation and reduced the junket business.
As seasoned industry observers at Global Betting & Gaming Consultants (GBGC) note, Sands and Wynn Resorts have the experience of growing their non-gaming entertainment in Las Vegas and they are bringing that to bear at their Macau properties. Looking at their Macau websites, you wouldn’t know they even have a casino in their resorts. Gaming barely gets a mention. The focus is on dining, shopping and shows.
Macau will remain the “Las Vegas of Asia” for now
Macau’s gaming revenues are at a low. At its peak, Macau accounted for 10 per cent of all global gambling revenues but in 2021 it accounted for just 2 per cent. That’s a measure of how much Macau is suffering. At the moment, however, there is little immediate competition to its title as the ‘Las Vegas of Asia’, according to GBGC.
See also: Macau to revise GGR forecast for 2022
Could possible competitors emerge. According to GBGC: “If we look around, Singapore has two striking venues but no further casinos are planned and future expansion of the existing resorts is based on non-gaming facilities. Japan certainly has the potential to steal the title but it seems unwilling to seize the opportunity at the moment.
“The most serious contender is the Philippines, which has developed several integrated resorts to rival Macau. It has also recently allowed licence holders to begin online gaming operations, which is an advantage over Macau’s concessions. But Macau retains the geographical advantage of its proximity to mainland China.”
Macau is expected to pass its new gaming legislation this month and to begin a retender for its six casino concessions in the second half of the year. No major surprises are expected there – although there are still questions about the future of Macau’s satellite casinos tied to the six main licences. It remains to be seen however when Macau gaming revenue will finally start to recover from the impact of the pandemic, what impact China’s clampdown on cross-border gaming could have and how the Las Vegas of Asia will look in years to come.