Inside Asian Gaming

INSIDE ASIAN GAMING | August 2010 4 Editorial Inside Asian Gaming is published by Must Read Publications Ltd 8J Ed. Comercial Si Toi 619 Avenida da Praia Grande Macau Tel: (853) 2832 9980 For subscription enquiries, please email subs@asgam.com For advertising enquiries, please email ads@asgam.com or call: (853) 6646 0795 www.asgam.com Inside Asian Gaming is an official media partner of: http://www.gamingstandards.com Michael Grimes We crave your feedback. Please email your comments tomichael@asgam.com Publisher Kareem Jalal Director João Costeira Varela Editor Michael Grimes Business Development Manager Domingos Abecasis Contributors Desmond Lam, Steve Karoul I. Nelson Rose, Richard Marcus Shenée Tuck, James J. Hodl Andrew MacDonald William R. Eadington Graphic Designer Brenda Chao Photography Ike Don’t Forget JoeWong The United States has Black Friday—the traditional start of the Christmas shopping season. Macau has Big Wednesday. This was the famous moment when, back in 2006, a player at Wynn Macau pumped the equivalent of several thousand US dollars into a slot machine. It must have seemed a double blessing to the management given that Wednesdays generally tend to be about as popular with players (and therefore casino managements) as Friday the 13th is with air travellers. How times have changed. Just four years later, a number of Macau slot players (an admittedly small number) are dropping the equivalent of hundreds of thousands of US dollars per session as we report in our main story, ‘A Growing Game’. That’s been one of the factors in a near 30% increase year on year in the slot gross in Macau in the first half of 2010. No operator could or should ignore any whale, whether they’re at the tables or the slots. But the rise of the slot VIP does hint at the distorting effect that high volume VIP play can have on the Macau gaming market. In a bull run, the casinos must chase the VIP growth because of its sheer volumes, albeit (in the case of table play) small margins. What that currently means is that the Macau properties that are weaker in the VIP table segment—namely MGM Macau and City of Dreams—are having a clear out of Western marketing people and bringing in Chinese marketing executives to bring in the high end punters. Many will think it should have been done earlier. It’s clear that the number of high net worth people in China is growing rapidly. According to the World Wealth Report, compiled by financial management company Merrill Lynch and management consultancy Capgemini, China overtook the United Kingdom in 2009 for its number of US dollar millionaires. China had 364,000 at the time of the survey, and probably has a lot more now. A new Chinese millionaire can’t, however, be turned into a Macau high roller overnight. Sources familiar with the junket trade tell us it can take six months from personal introduction of a would-be player to them being granted credit. What that means for the operators is that high rollers are a precious resource to be courted assiduously. Like beauty queens at a village fair, the VIPs know their own worth and are driving an increasingly hard bargain with the junkets and with the casinos (when coming in as direct players). Las Vegas Sands Corp Chairman and Chief Executive Sheldon Adelson said as much during his company’s second quarter earnings call. Mr Adelson indicated that a side effect of that was for LVS to rethink its strategy of boosting direct play as a component of its VIP business in Macau. Between the lines, the message was: ‘The Macau direct play margins are getting so squeezed, we might as well let the junkets take the strain and let them worry about collecting on credit’. Instead, he wants to ship as many direct players as possible out to Singapore. He may not get the quantity of VIPs by that route, but he will arguably get the quality. Such is Singapore’s reputation for running a robust legal system that every VIP coming to Marina Bay Sands so far has paid his tab on time, said Rob Goldstein, Executive Vice President of LVS. The company can also afford—thanks to Singapore’s lower tax rates—to give more back to the VIP players than can the junket agents or the casinos to their VIP players in Macau. Sowheredoes this leaveAsia’smass-marketplayers in themindsof casinomanagements? By no means neglected. The massive amount spent in Macau and Singapore on equipping main floors with slots and multiplayers as well as live tables is testimony to that. It’s important that operators don’t take their eyes off the mass market. The VIP segment is roaring ahead, driving much of the 67.5% year on year growth in the Macau gross. As such, it’s likely to attract the best and brightest executive talent to manage and build it— winning the plaudits that go with that. But the mass market isn’t a casino career backwater. It has plenty of extra value still to be released. The campaign to build the growth of carded slot play in Macau is a case in point. The mass-market managements need the attention and support of their bosses just as much as the VIP marketing team. Let’s hope they get it.