Inside Asian Gaming

February 2010 | INSIDE ASIAN GAMING 7 C hinese companies and Chinese consumers spend a lot of time, effort and money celebrating Chinese New Year. But in Macau at least, it seems they’re not splashing much of the cash on gambling. Data show that visitor numbers to Macau tend to peak during the month of Chinese NewYear compared to the month either side of the lunar holiday. But gambling revenues commonly fall during the holiday month. This appears at first sight to be counter-intuitive. The greater the number of people visiting a resort in holiday mood, the more those people will spend, logic would suggest. But that doesn’t take account of cultural factors and a number of economic ones. Chinese people traditionally regard the run up to the lunar new year as a time for settling outstanding debts. They take this responsibility seriously, despite their reputation as fearless and dedicated gamblers. The reason may be as much self-interest as for the protection of their reputation. There’s a pervasive belief in Chinese culture that doing good or meritorious deeds can actually be of benefit to one’s fortunes in the future. Culture versus cash Even if one discounts this cultural factor as too airy-fairy a contribution to Macau’s bottom line to be worthy of analysis, there are other structural issues that might negatively affect gambling revenue during Chinese NewYear. One is the rather lopsided nature of Macau’s gaming market. Year after year, statistics show that more than 60% of all gambling revenues in Macau come from VIP baccarat. And it seems that during Chinese New Year at least, the high rollers stay away, or stop spending so much money. The evidence to support this proposition is that in the four years from 2006 to 2009, only once did Macau punters gamble more on VIP baccarat in the first quarter of the year than in the second. That’s according to figures from Macau’s gambling regulator, the Gaming Inspection and Coordination Bureau. Perhaps the Macau VIPs are all in Las Vegas during the holiday. Sin City recorded a more than 100% rise in its annual take from baccarat between 1996 (when it stood at US$455.6 million) and 2008 (when it topped US$1 billion), according to the Las Vegas Convention and Visitors Authority. Family is particularly important in Chinese culture, and most VIP baccarat players are likely to be heads of extended families as well as heads of businesses. That may mean their presence is required elsewhere during Chinese New Year. In any case, most VIPs that visit the Macau high limit rooms don’t seem keen on crowds, and the lunar new year in Macau definitely brings in crowds. In February 2007 (the Year of the Pig), when the Chinese New Year was on 18th February, there was a 14% increase on visitor numbers entering Macau via the Macau Maritime Ferry Terminal compared to January that year. Yet in February ‘07, gaming revenue actually fell 4.4% compared to January ‘07. Trend There was a similar pattern in 2008 (the Year of the Rat) when Chinese New Year was on 7th February. Figures from Macau’s Statistics and Census Service (DSEC) show that in February 2008, 787,500 people arrived in the territory via the main ferry terminal. That was a 14.9% increase on visitor numbers via the terminal compared to January. Yet in February ’08, gaming revenue actually fell 9.5% compared to January ‘08. And that was despite the fact that 2008 was a leap year, meaning there was an extra day in February. In 2009 (the Year of the Ox), when Chinese New Year was on 26th January, the pattern of the previous two years was disrupted. A total of 801,500 people arrived at themain ferry port—a dropof 7.8%on the previous December. Yet gambling revenue was up 10.3% compared to December ‘08. A possible explanation for the fall in visitor numbers but rise in the gross is that the Chinese government was rationing visitor visas for its citizens, but those people who did come were feeling more confident about the economic outlook post global credit crisis. Claw Back VIP-free Chinese New Year is a great time to market to the masses in Macau Cover Story