Thursday, July 07, 2022

Gaming to continue to drive Macau’s wealth


Twenty-nine years ago I visited Macau for the first time. It was a consolation day trip from Hong Kong for not being able to apply and obtain a visa to enter China in less than a week when I had only four days to spend.

My friend and I took up the offer of a tour guide with a van upon arrival at the Macau terminal, and off we went. Ah Ma temple, St Paul ruins … the usual tourist offerings then.

Then our tour guide asked if I was an overseas Chinese. It appeared that in the early 90s, China permitted overseas born Chinese to take in electrical goods such as TVs, heaters and refrigerators duty free once a year as gifts for their relatives. Apart from procuring on the spot free visas for my friend and I, I was also paid AUD$200 to get the vouchers stamped at the border, which in turn would allow the ‘people’ to bring in the goods at a later stage. After the short journey across a little bridge, our greeter advised that should I return in the future, I would get AUD$600 instead of $200. It seems that our guide received $200 and an intermediary he went through also received $200.

Fast forward to today, Macau is now the fourth-richest country in the world in terms of GDP per capita (PPP) at US$110,000 in 2017 according to the CIA Factbook. Like Singapore, we have no natural resources and even have to import our water. Our only ‘resource’ is the mandate to host gambling for the Chinese.

We have some of the world’s top earning casinos in our midst, their owners catapulted into Forbes billionaire ranks. In the space of just twenty years, our gaming industry has emerged to become a world leader. Where Vegas and Monte Carlo, Macau’s initial role models, are still using decades old systems, Macau commands with cutting age digital hardware on every gaming table. 

We have pioneered new modes of gameplay and game tracking such as the Fast Action Baccarat and digitized Baccarat scoring. We have introduced higher standards of gambling addiction preventative measures such as prevention of continuous play and continuous note insertions in slots, as well as the recent banning of all casino employees from casino floors. More stringent protection of non-smokers than anywhere else in the world with a complete ban property wide and the introduction of negative pressure smoking chambers. And now the installation of leading AI recognition technology.

Local companies with no gaming background whatsoever have emerged as category killers. Galaxy Entertainment, a building products supply company, has excelled in the VIP segment as well as F&B. Melco Resorts & Entertainment, a formidable competitor in premium mass. 

The foreign companies too have learnt the business, Chinese business, and the art of Baccarat. Their footprint in Macau has enabled them to leapfrog over their  competitors at home in terms of earnings and consequently, the all-important market capitalisation.

Macau will never be a Vegas nor a Monte Carlo. It doesn’t have to be. Macau is a juxtaposition of new and old, east and west. With a horde of international casino operators eagerly awaiting the new concession bidding process, Macau is in a position to dictate its wants and needs for the next phase of growth, which is to share the wealth throughout the whole society through diversification.

Macau’s uniqueness lies in the fact that it sits as a gateway to the Chinese market, inarguably the world’s single largest gaming market. Despite the next chapter to be focused on non-gaming attractions amidst an integration effort into the greater bay area in which it sits, Macau will likely continue its trajectory as a Mecca of gaming for the next thirty years.

Its way of doing business is to share, as per my own experience, rather than exclude.  For my part, I was happy to have shared with the others as without them, I would not have had my most rewarding China experience. A lesson in there perhaps for some?

 

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* Ben Lee is the managing partner of IGamiX Management & Consulting based in Macau. He is acknowledged as one of the experts in the Asian gaming market. With extensive gaming experience all over Asia and Australia, Ben has been covering and uncovering new gaming projects around the Asia Pacific region.

Asia Gaming Brief is a news and intelligence service providing up to date market information for worldwide executives on relevant gaming issues in Asia.

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