Inside Asian Gaming

9 8 lot machines are finally starting to make their presence felt in Macau. The city had 7,349 slot machines at the end of the first quarter of 2007, representing an 80% increase from the 4,073 machines in the same quarter of 2006 – and a whopping nine-fold increase from the 814 machines in 2003. The table count in the first quarter of 2007 was 2,970, representing a 79% year-on- year increase. Whereas both tables and slots saw simi- lar capacity growth in 2006, the average win per slot per day only declined from US$138 on average in 2005 to US$135 in 2006 (a 1.8% decline), while the win per table fell from around US$11,600 in 2005 to US$8,500 in 2006 (a 26.4% reduction). Making Their Mark Gaming machines are gaining ground on tables in Macau as the market grows and manufacturers win over players with entertaining slots Previously, investment in slot machines was held back by the high marginal returns from putting in more tables. As win per table continues declining, the explosive growth in slot capacity could pick up further, observers say. Macau’s slot revenue in 2006 reached US$249.5 million – a 64.4% increase over the US$151.8 million collected in 2005. Still, slots continue to contribute only a small propor- tion of total Macau casino gaming revenue. Slots contributed 3.6% of total Macau casino win in 2006, which though paltry compared to their 70% contribution in Las Vegas, is a vast improvement from before 2003, when they did not even make up for one percent of total revenue. Bally Technologies President and CEO Richard Haddrill said in a recent interview that Macau offers extremely promising op- portunity for gaming systems technology and game providers. “It’s hard to not be excited about Macau,” said Haddrill, whose company recently re- ceived a huge order to provide gaming sys- tems products to the Las Vegas Sands prop- erties,including those inMacau.“The amount of development there is just so dramatic, and it’s a new enough market that it really creates sort of a ‘green field’ opportunity for suppli- ers like Bally.” Macau’s current top slot performer is the glitzy US$1.2 billion Wynn Macau, billed as the city’s first destination resort. Wynn Ma- cau opened on Sept. 6, and the novelty factor combined with a low machine count gave Wynn Macau a high average slot win per unit per day of US$418 million in the fourth quar- ter of 2006, compared to the Macau aver- age of US$127 and Wynn Las Vegas’ US$251. Wynn Macau had a mere 366 slot machines in the quarter, so had a total slot win equiva- lent to only around 30% of that at the Vegas property, which boasts 1,974 machines. The Wynn Resorts fourth quarter results announcement showed the company has a higher slot win percentage in Macau than in Vegas,where the slot market is more compet- itive, prompting higher payout percentages. Wynn Las Vegas had a slot handle of US$1.1 billion in the fourth quarter – four times greater than the Wynn Macau slot handle of US$274.4 million.Wynn Las Vegas had a total slot win only 3.3 times greater than that of Wynn Macau, however, indicating the Macau property held over 20% more of the money played on its slots. Wynn Macau increased its slot count to 477 in February this year, and construction is under way on the second phase, which is ex- pected to be unveiled in the third quarter of 2007 with 1,280 slot machines. Hot Mocha Mocha Slot, a subsidiary of Macau gaming li- censeeMelco PBL Entertainment (Macau) Ltd, operates a string of trendy venues focused exclusively on machine gaming, and at the end of 2006, had six outlets with about 1,000 machines. Mocha Slot is the city’s second best slot performer in terms of average daily win per unit, at US$248 in the fourth quarter. Given its higher slot count, Mocha Slot leads Wynn Macau in terms of total slot win. Mocha Slot is the brainchild of Lawrence Ho, son of Macau casino tycoon Stanley Ho. During his father’s 40-year casino monopoly, the younger Ho claims casinos in Macau only included slot machines in order to“look more like a casino,” with Stanley Ho happy to gen- erate huge profits by neglecting the main floor and concentrating on the VIP market. The first Mocha Slot outlet opened in late 2003, and the company was a pioneer in gaining mass market acceptance of slots. Mocha Slot General Manger Ted Chan ex- plained that convincing table-loving Chinese gamblers to try out slots required a novel ap- proach. Mocha Slot’s solution was to first in- troduce electronic versions of popular table games, such as sic bo, baccarat and roulette. These electronic table machines, known as multi-terminal games,offer a hybrid between tables and slots, and are a fairly new innova- tion globally. At first, multi-terminal games made up 70% of the machine mix at Mocha and made up for a similar proportion of the company’s total revenue.Following a“migrationwe have witnessed over the past three years,” multi- terminals make up less than 50% of capacity and revenue, having been replaced by regu- lar slot machines, according to Chan. “Most of our players started with multi- terminals because they are familiarwith these games,” Chan explained.“But slowly they be- came curious about the slot machines next to the multi-terminals. When they saw more and more people actually winning jackpots, they began to see the point of slots.” Chan believes strongly in the potential of slots, given their “variety of interface, theme and design,”which makes them“more enter- taining” than table games, which are “always played the same way.” Chan predicted Macau will have 14,000 slot machines by the end of 2007 – a more than doubling in capacity. The US$2.6 bil- lion Venetian Macau Resort Hotel alone will add 4,300 slots when it opens in July. Mocha, which has six outlets, is also looking to open a further two venues in 2007, though it will only make a modest addition to the total count, with its outlets each containing an av- erage of 150 machines. Mocha’s target is to have 1,400 machines by the end of this year, up from the current 1,000. Some predict Macau may have as many as 50,000 new slot machines by 2010. On the Cotai Strip alone, Las Vegas Sands Corp plans to add 16,000 slot machines in the next decade as it builds out seven different hotel sites. Asked whether he is concerned about the arrival of mammoth properties such as the Venetian Macau, Chan said,“I don’t really compete with the casinos. Sands and Wynn focus on visitation of property. They don’t care if visitors play tables or slots. Mocha’s fo- S