Inside Asian Gaming

insid e asian gaming Ju ne 2016 4 EDITORIAL Ben Blaschke We crave your feedback. Please email your comments to [email protected] . Inside Asian Gaming is part of www.wgg9.com Inside Asian Gaming is published by Must Read Publications Ltd +853 2883 6497 For subscription enquiries, please email [email protected] For advertising enquiries, please email [email protected] or [email protected] or call +853 6688 7214 or +853 6280 8737 Printed by Cochin Advertising Printing Service Co., Ltd. Est. Nova da Ilha Verde 180 r/c R www.asgam.com ISSN 2070-7681 Chief Executive Officer Andrew W Scott Managing Editor Ben Blaschke Editor at Large Muhammad Cohen Other Regular Contributors Paul Doocey, Kareem Jalal, Rui Pinto Proença, I Nelson Rose, Andrew W Scott Graphic Designer Rui Gomes Photography Ike, Gary Wong, James Leong, Wong Kei Cheong Founder and Adviser Kareem Jalal ◊ Chief Marketing Officer Derrick Tran Chief Sales Officer Paul Lee Chief Operating Officer Michael Mariakis Director and Administrator Cynthia Cheang Administrative Assistant Suie Ng Macau’s lost opportunity A t a time when Macau’s concessionaires are desperately searching for new revenue opportunities amid a rapidly shifting market, the decision by the Gaming Inspection and Coordination Bureau (DICJ) to extend Macau Slot Co Ltd’s monopoly on sports betting comes as a real slap in the face. According to Macau’s Official Gazette, Macau Slot’s limited concession – which allows for betting only on football and basketball at 10 outlets in and around SJM properties – has been extended for five years until 5 June 2021. Betting on any other sport or anywhere else remains banned at least until the new deal expires. Yet this defies the government’s very own mandate to diversify the Macau market. The economic downturn that has seen gross gaming revenue fall by 50% from its February 2014 peak of MOP$38 billion (US$4.75 billion) has become a well-worn tale. Chinese President Xi Jinping’s anti-graft campaign saw Macau’s fortunes change almost overnight, with the resulting decline in VIP visitors contributing to 24 months (and counting) of declining year-on-year revenues. In conjunction with the Macau SAR Government, the counter-measure has been an edict for Macau’s concessionaires to diversify their offerings – specifically, to provide more non- gaming attractions to help boost Macau’s tourist appeal. The general concept is a sound one. For all the giddy excitement Macau’s soaring fortunes created at the time, just about everyone we’ve spoken to over the past two years agrees such incredible growth was never going to be sustainable. The industry needed a reality check. But what does diversification really mean? According to the government’s own decree, Macau needs to reshape its image from a purely gaming destination to one with much broader tourist appeal – one set apart by its disparate and distinct array of world class entertainment. As explained in our “Reinventing the integrated resort” article in the edition of IAG you are holding in your hands now, the modern thinking is that new properties opening in Macau over the next 18 months need to position themselves as resorts with a casino, rather than casinos with a resort. It would be a huge mistake, however, for the government to view diversification as a purely non-gaming pursuit. Quite the opposite in fact, Macau’s casino floors must undergo a transformation of their own if they are to keep pace with this new mass market customer heading their way. That’s where sports betting comes in. In Las Vegas, where non-gaming attractions now account for almost 70 percent of annual revenue, gross gaming revenue has remained largely stagnant in recent years despite mass market visitor numbers steadily increasing. The one sector to have bucked that trend is sports betting. The US$292 million wagered on sports in April 2016 was an all-time record with revenues up a whopping 70% on a year earlier. It also continued a run that has seen sports wagering increase in 32 of the last 36 months with annual hold having almost doubled since 2010. The crucial factor for Macau is that these are the same mass market customers being targeted by Macau’s diversification push. Walk into any glitzy Las Vegas sports betting lounge and you’ll find a healthy smattering of tourists for whom betting sports is all part of the Las Vegas Strip experience. The last place they want to be is sitting at a crammed baccarat table betting minimum HK$1,000 a hand. Back in 2014 whenMacau’s VIP rooms were bustling, mass and premiummass customers accounted for around 35% of the city’s gross gaming revenue. That figure now stands at almost 54% and is expected to rise to around 60% by 2020. But as Macau’s visitor demographic evolves, its casino floors must evolve with them. That’s why this five year extension of the current sports betting model in Macau defies all logic. To actively promote the growth of the mass market sector then deny concessionaires a product to match suggests the Macau SAR Government is still struggling to find a clear plan for the future. As Dr Allan Zeman observes in our cover story this issue, they are a government in need of a vision. Until they sit down and devise one, the “new Macau” will struggle to fulfil its potential.