Inside Asian Gaming

7 6 n late 2003, Mocha Slot entered the Macau market by opening a modest 3,000 sq ft outlet at the Royal Hotel, establishing the city’s first real gaming brand. Mocha Slot is the brainchild of Lawrence Ho, son of Macau casino tycoon Stanley Ho, who is himself trying to revive his company by elevating its image – the first step will be opening the glitzy Grand Lisboa later this month. During Macau’s 40-year casino monop- oly, Stanley Ho was happy to generate huge The Serious Slot Player Mocha Slot is not afraid of competition from the vast gaming halls of Macau’s upcoming mega-resorts, which are set to swamp the market with thousands of new slot machines. Mocha Slot General Manger Ted Chan believes the company will continue to thrive by providing small but conveniently-located venues devoted solely to machine gaming profits by neglecting the main floor and con- centrating on the VIP market, where relation- ships rather than image drive business. Pun- dits predicted it would take many years for the new foreign casino operators to tap into the VIP market because of the importance of established relationships. However, the rapid and unexpected rise of the newcomers’share of the VIP market since 2005 – the first for- eign operated casino, Sands Macau, opened in May 2004 – has proven image is important for everybody. Slots were distinctly lacking an image during the monopoly era, when Lawrence Ho believes casinos only included slot ma- chines in order to “look more like a casino.” While slots continue to contribute only a small proportion of total gaming revenue, they are showing explosive growth. Macau’s slot revenue in 2006 reached US$249.5 mil- lion – a 64.4% increase over the US$151.8 million collected in 2005. Slots contributed 3.6%of total Macau casinowin in 2006,which though paltry compared to their 70% contri- bution in Vegas, is a vast improvement from before 2003, when they did not even make up for one percent of total revenue. In 2003, Macau had a mere 814 slot ma- chines, but even so demand outstripped supply, as witnessed by the banks of idle machines at Casino Lisboa. In order to make slots more appealing, Lawrence Ho came up with Mocha Slot, a string of trendy and cosy outlets which focused exclusively on ma- chine gaming. Getting Them Through the Door As discussed in the last issue of Inside Asian Gaming , 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. “Most of our players started with multi- terminals because they are familiar with these games,” explains Mocha Slot General Manager Ted Chan.“But slowly they became 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.” 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 Mr Chan. Mr Chan believes strongly in the poten- tial of slots, given their “variety of interface, theme and design,”which makes them“more entertaining” than tables games, which are “always played the same way.” Steady Slot Returns Macau now has 6,546 slot machines, repre- senting a 91% increase from the 3,421 ma- chines in 2005. The table count as of 2006 was 2,762, representing a 99% 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 win per table fell from around US$11,600 in 2005 to US$8,500 in 2006 (a 26.4% reduction). Previously, invest- ment in slot machines was held back by the high marginal returns from putting in more tables. As wins per table continue declining, the explosive growth in slot capacity could pick up further. Mr Chan predicts Macau will have 14,000 slot machines by the end of 2007 – a more than doubling in capacity. Venetian Macau alone will add 4,300 slots when it opens in July.Mocha, which currently has six outlets, is I The popular Vegas Star