Macau casino suppliers relocating to other markets
Companies have started to move staff, and inventory to the Philippines and Singapore due to China’s ongoing Covid Zero policy.
Macau.- China’s decision to continue with its Covid-19 Zero policy has caused several companies dedicated to the sale of casino gaming equipment to relocate manpower and resources to other jurisdictions in Asia like the Philippines and Singapore.
According to Bloomberg, Light & Wonder Inc, has opened a new office in the Philippines, which has become its most important market in Asia, and is relocating its overseas staff there due to the drop in demand in Macau caused by low tourist numbers.
Ken Jolly, vice president and general manager of Asia for Light & Wonder, said Macau casinos won’t buy new equipment until they get a licence to continue operating in the licence retender. Without new sales, the company is receiving only limited revenue from maintenance and technical support.
Bloomberg reports that an equipment maker from Japan is also relocating up to 30 per cent of its workforce and pulling more than half of its inventory out of Macau due to supply chain issues and a 90-per cent plunge in revenue.
Jay Chun, president of the Macau Gaming Equipment Manufacturers Association, said he was aware of at least four multinational casino operators that were moving labour and resources overseas.
Chun noted that Macau is also revising standards for electronic slot machines, forcing manufacturers to develop new software, which can be particularly expensive and challenging for smaller operators. As a result, some may choose not to upgrade less popular machines.
Daniel Cheng, a former executive at gaming companies such as Hard Rock International, added to get the new licence, and as part of Beijing’s efforts to reduce Macau’s reliance on gambling, casino operators must commit to investing in non-gaming sectors such as traditional Chinese medicine and technology. That will force them to cut spending on underperforming slot machines.
The trend may accelerate after the government set the maximum number of gaming tables and slot machines allowed in casinos from 2023.
The maximum number of gaming tables across all casinos will be 6,000 while the maximum number of gaming machines has been set at 12,000. In 2019, there were already 17,000 machines on the market.
In August, Macau’s gross gaming revenue (GGR) was up 450 per cent in August, from MOP398m (US$49.2m) to MOP2.19bn (US$270.8m). However, the figure was down 50.7 per cent when compared to August 2021.
Meanwhile, Singapore’s gaming revenue recovered to 70 per cent of its pre-Covid-19 levels in the second quarter, while the Philippines and South Korea both returned to around 75 per cent.
