Inside Asian Gaming

INSIDE ASIAN GAMING | April 2012 8 Cover Story tables doubled to 23%. It climbed back to 73% in 2011. The years have seen some traditional games fade in importance while others have come from obscurity to become bellwethers of a more diverse and increasingly more mainstream player base. Machine gaming has been the most notable. An insignificant sector in the monopoly days, slot GGR has been growing since 2002 at twice the annual rate of the market as a whole. Last year, the machines generated MOP11.42 billion, good for 4.3% of total revenues. Only baccarat earns more. Stud poker, unknown before 2003, took in MOP1.3 billion in 2011. Texas Hold ’Em, a MOP54 million game when it debuted in 2008, took in MOP277 million last year. GGR from electronic multi-games has more than doubled to MOP311 million 300 250 200 150 100 50 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Rising expectations—Macau gross gaming revenue Billions of patacas Source: DICJ The “Individual Visit Scheme” was introduced on 28th July, 2003 to boost economic growth in the repatriated former colonies of Hong Kong and Macau. As the name suggests, it allows travelers from select cities in Mainland China to visit the country’s two self-governing “special administrative regions” on a limited basis as individuals. Previously, this required a business visa or membership in a group tour. Mainland Chinese are the fuel driving Macau’s red-hot gaming industry, and the IVS is the reason why. The IVS was enacted by the central government in Beijing as a means to offset the impact of the severe acute respiratory syndrome (SARS) epidemic, which took its toll in the first half of 2003 on the economies of both Macau and Hong Kong, with the latter already reeling from the effects of the Asian financial crisis. Hong Kong was the intended primary beneficiary of the scheme, following an unprecedented street demonstration by well over half a million people there on 1st July, 2003 (the sixth anniversary of the handover of the city to Chinese sovereignty). While the nominal focus of the protest was a proposed anti-sedition bill in Hong Kong, China surmised the city’s economic woes were the real root of the protestors’ dissatisfaction, and the IVS was one of a few economic gifts bestowed by Beijing in response to boost Hong Kong’s economy and appease its population. While Hong Kong was the targeted beneficiary, Macau and its tourism-dominated economy ended up reaping the biggest gains from the IVS scheme. Coming as it did the year after the first post-monopoly casino concessions were awarded, the timing couldn’t have been more propitious. To give you an idea of its impact, in 1999, the year Chinese sovereignty was restored, the Macau Statistics and Census Bureau counted 1.6 million Mainland Chinese visitors. In 2010, those visits totaled more than 13 million, 53% of all arrivals, and 5.4 million of them, or 41% of all Mainland visitors, made the trip on individual visas. Last year, Mainland Chinese comprised 57% of visitor arrivals, a surge of 17% year-on-year, and individual visas accounted for about 42% of that. Today, the IVS generates 70% of China’s outbound tourism. Currently, about 270 million residents in 49 cities are eligible to apply, including all 21 cities in Guangdong, the province bordering Macau and Hong Kong and the most populous in the country. IVS travelers pay dividends outside the casinos too. Because the scheme restricts the frequency and duration of their visits, Mainland visitors tend to stay longer and spend more—MOP2,039 per capita in Macau in 2010 versus MOP1,158 by visitors from other countries—and they constitute more than half of all hotel guests. When China opened the floodgates