Macau casinos urged to target mass market

Macau casinos urged to target mass market

 

Macau’s casino industry, which surpassed the Las Vegas Strip in gaming revenue in 2006, should lure more mass-market tourists instead of relying on high rollers from China, analysts and industry officials said.

 

The former Portuguese colony, the only place in China where casinos are legal, is in a ‘perilous situation’ because companies are chasing ‘growth that cannot be sustained’, Norman MacKillop, the Macau head of gaming industry investigator Spectrum OSO Asia, said in an interview.

 

Las Vegas Sands and Wynn Resorts are among those investing at least US$25 billion in Macau, where gaming revenue may more than double within three years to more than US$20 billion.

 

That’s mostly driven by catering to gamblers who spend at least a million patacas (S$169,500) each visit. VIP gaming accounted for 67 per cent of Macau’s total gaming revenue last year, up from 63 per cent in 2006, according to the city government.

 

Investing in ‘VIP rooms is actually more risky and less sustainable’ than targeting slot-machine players and tourists who play low-stakes table games, Ricardo Siu, associate professor of gaming management and economics at the University of Macau, said on Thursday. The VIP market’s ‘profit margin is much smaller than in the mass market’.

 

Before Las Vegas Sands opened Macau’s first foreign-owned casino in 2004, 78 per cent of gaming revenue in the city came from high-rolling gamblers taken to the casinos by junket operators, who also lend money.

 

The growth fuelled by high rollers, who provide about two-thirds of gaming revenue for MGM Mirage’s Macau casino, ‘isn’t sustainable in percentage terms’, said Gabe Hunterton, MGM Grand Macau’s vice-president for casino operations. ‘Profit margins in the mass market are much, much higher than in the VIP segment,’ he said in an interview at the Global Gaming Expo Asia 2008, an industry conference held in Macau.

 

Macau’s gaming revenue grew 45.7 per cent last year to 83.8 billion patacas. That may expand 29 per cent in 2008, according to Las Vegas-based gaming research firm Globalysis. — Blooomberg

 

Source : Business Times

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