Inside Asian Gaming

12 out that “the Macau gambler seems to be chasing higher jackpots more than the Aus- tralian gambler.” IGT marketing analyst Loren Stout point- ed out that “here there are people who’ve never seen a slot machine before in their life. A lot of things that manufacturers have put in games that make it successful in other mar- kets don’t work here.” IGT’s linked product “Great Escape” (fea- turing a linked symbol-initiated bonus), performs strongly in Macau at locations like Mocha Slot and Sands Macau. IGT’s step- per reel product “Yee Hah Hi” (chicken, crab and fish) does well at the Sands, and IGT has just obtained approval to deploy other Chi- nese-specific steppers in the city. Stout also expected future strong results from the Chi- nese-themed video-linked “Three Kingdom Wars,” developed in conjunction with Sega, which is currently awaiting regulatory ap- proval for launch in Macau. Not to be outdone, Aristocrat recently chose Macau as the international launch pad for three Chinese themed games — “Fifty Dragons,”“Water Margin” and “Monkey Chal- lenge”—and has several more such games in the pipeline. Gissane claimed that Aristocrat owns the top-performing standalone games in the market, including the Chinese-themed “Choy Sun Doa” (initially created for Austra- lia), the Chinese themed “Five Dragons” and newer “Fifty Dragons,” in addition to a locally marketed version of the popular “Fifty Lions.” China First Despite the recent move by manufacturers to produce Chinese-themed products, Mocha’s Chan pointed out that the existing major slot manufacturers do not fully address the Asian market, perhaps because the tiny Macau market makes up such a small proportion of worldwide slot sales. “Over the past 20 years, Asian players have contributed too little to the slot market,” Chan said. “Most slot games are developed by U.S. and Australian slot makers for their own markets. Unfortunately, we have to choose fromwhat is available.The products are not customized for our market. “What I hope eventually happens is that some big [Asian] slot operators to negotiate with the slot manufacturers or to cooperate with them to develop new games and then re-export them to the US” Chan suggested manufacturers develop games with greater volatility to appeal to Chinese gamblers, as well as games with Chi- nese-language interfaces (some manufactur- ers are only willing to translate the machines’ buttons and displays to perfunctorily satisfy their clients) and Chinese-themes. Even the popular electronic baccarat ma- chines are not properly customized for the Macau market. The established practice in Macau is for the house to take a 5% commis- sion on winning banker bets. But manufacturers only of- fer electronic baccarat machines that run ac- cording to Las Vegas rules, where there is no commission but the house takes half the bet if the banker has a six.This can,of course,con- fuse players in Macau unfamiliar with Vegas rules.“We are forced to take it. Fortunately, it is still very popular in Ma- cau,”Chan said. The alliance between Shuffle Master and Melco subsidiary Elixir will improve the game mix at Mocha Slot outlets by providing de- vices more attuned with the Asian market. “We will put our experience into the design [of Elixir’s products]. These games hopefully will be the most popular games in Asia,” said Chan, who added, “Mocha is a very important platform. Without this platform it is very hard to know what the market wants exactly.” This article,by Kareem Jalal,was commissioned for and originally appeared in the December issue of International Gaming & Wagering Business (IGWB). Slot Technology Gains in Macau Macau slot operators are cautiously start- ing to embrace modern slot technology. Mocha Slot, Wynn Macau, Sands Macau and the Galaxy properties all use cus- tomer relationship management (CRM) systems, particularly as part of rewards programs. Mocha and Wynn use the IGT system, while Sands uses Bally.Mocha Slot General Manager Ted Chan said he be- lieved that “apart from doing it yourself,” the IGT system provided the best room for customization of any patron manage- ment system, and added that the system fits best into a club membership environ- ment. Chan also added that cashless gaming was not yet appropriate for the immature Macau market, because people still need something “physical you can hold.”Wynn started using a ticket in-ticket out (TITO) system when it opened in September this year, while Mocha will start using TITO in the first quarter of 2007. None of Macau’s slot operators currently use downloadable gaming systems, opt- ing primarily for serverbased games. Macau Slot Market Operator Number of Slots * Sociedade de Jogos de Macau 2,118 Wynn Macau 380 Melco/PBL (Mocha Slot outlets) 707 Sands Macau 1,254 Galaxy Entertainment Group 935 Total 5,394 * Slot totals as of October 30, 2006 Macau residents have an aversion to casinos which are “still perceived as a symbol of sin,” according to Chan, while slot halls “though still gambling,” are regarded as an accept- able way of “killing time.” Transition Slot Still, getting customers to play tables less and slots more will be far from an easy task. CLSA analyst Aaron Fischer offered the following explanation for the greater popularity of tables than slots among Chi- nese gamblers in his authoritative Macau Mania report. “The style of gaming is dif- ferent, with a much higher level of player intensity in Macau than in Las Vegas. Gam- ing in Macau is a battle against the house whereas in Las Vegas it is treated more as a source of entertainment. Players in Macau are more likely to be from a lower socioeco- nomic background but are also prepared to spend more of their disposable income on gaming. These reasons favour table games where the stakes are higher.” Until recently, gamblers in Macau also believed that slots—known in the Canton- ese dialect as “hungry tigers”—were rigged by casinos to offer meagre payouts. With increasing competition in the slot market following the liberalization of the gaming industry in 2002, slot machines in Macau are paying out more. Another explanation for the dominance of table games in Macau is that Chinese gam- blers supposedly believe they can influence the outcomes by spotting patterns and pick- ing lucky cards or numbers, whereas they leave their destinies to unfeeling and possi- bly corrupt computers when playing slots. Such attitudes are quickly changing however, in large part due to the efforts of Macau’s slot hall operators to educate Chi- nese gamblers. For example, to make table-loving Chi- nese gamblers more comfortable with ma- chines, Macau slot hall operators brought in 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 ta- bles and slots, and are a fairly new innovation globally. But while Macau remains the primary market for multi-terminal machines, patrons appear to be transitioning away from this style of device and to the standard slot ma- chine, according to slot hall operators like Mocha Slot. Indeed, when Mocha Slot first opened in 2003, multi-terminal games made up 70% of the machine mix. Today, multi-ter- minal devices take up less than 50% of Mo- cha Slot, replaced by regular slot machines. Game Approach When it comes to slot machines, the undis- puted market leader in Macau is Australia’s Aristocrat Technologies, which claims 41% of the installed upright slot market.IGT declined to provide its own market share, but is likely to command up to 20% of the market. These leadership positions will likely be challenged going forward however, largely because Macau appears to be regarded as a potential goldmine by slot machine manu- facturers from around the world. Many inter- national manufacturers, including Bally Tech- nologies, Shuffle Master’s Stargames, TCSJohnHuxley and RGB have set up marketing offices in the city in order to get closer to local clients. Other niche players like Slovenia’s Interblock — which provides the bulk of Mocha Slot’s sic bo and roulette multi- terminals — have also established a foothold in Macau. Aristocrat’s top performer in Macau is the theme-based linked product “Cash Express” (featuring a mystery jackpot), according to the company’s local account manager, Kurt Gissane. The linked progressive jackpot is particularly popular among Chinese gam- blers seeking big payouts. Gissane pointed