fficials set to review Macau’s 35 casinos will examine how operators have diversified away from gambling in deciding who gets the most gaming tables in a new strip modeled on Las Vegas, and who are hanging on to concessions set to expire starting in 2020.
U.S. stalwarts such as Las Vegas Sands Corp. and Wynn Resorts Ltd. say they know the new game well.
“When you hear the central government and the Macau government urging operators to diversify the attractions of their facilities … they are preaching to the choir. We invented that idea,” Wynn Resorts CEO Steve Wynn told investors in a Wednesday conference call.
The industry review is also likely to shed light on what casino operators can expect as the first of their licenses start to expire in 2020. Lionel Leong Vai Tac, secretary for Economy and Finance in Macau, said in January there may be changes in taxes on casinos, according to local media, without giving further details.
It also comes as growth in gambling revenue has plummeted, with high-rollers quitting Macau’s tables in the face of Xi’s zeal for squashing ostentatious spending.
The rate of casino revenue growth in January was 17 percentage points lower than a year earlier, the eighth consecutive monthly decline, and February is set to be the worst on record with analysts predicting growth will be down some 35 percentage points.
The six licensed casino operators in the special administrative region say their record shows they can adapt. In Macau, where 1 in 5 people work in the industry, gambling accounts for 95 percent of total revenue, more than double that of Las Vegas.
“We believe it’s in the very best interests of the concession holders to demonstrate to the government the significant investment they are making to help diversify the economy towards other forms of entertainment such as theater and cultural activities,” said Aaron Fischer, an analyst at CLSA in Hong Kong.
“These investments should translate into approval for around 400 gaming tables — reasonable considering the capital expenditure investment of between $2.5-4 billion being made by each of the operators,” Fischer said.
Casino operators are also trying to emphasize good corporate culture and training for local residents, a key policy target of Macau Chief Executive Fernando Chui’s new administration.
“We promoted just under 2,500 employees, 90 percent of whom were Macau locals. As one of the largest employers in Macau, if not the largest, we take our responsibility to the community very seriously,” Las Vegas Sands CEO Sheldon Adelson told investors in a January 29 conference call.
Despite the extended slide in revenue growth, casino operators remain determined to make it big in Macau, with new developments popping up fast.
Over the next three years Melco Crown, SJM Holdings Ltd., Galaxy Entertainment Group and MGM China Holdings will open new resorts on the Cotai Strip, a reclaimed stretch of land between the bustling main peninsula of Macau and Coloane Island, which is modeled after the Strip in Las Vegas.
These developments point to the future of the gaming industry in Macau, featuring much more than just baccarat card tables and roulette wheels.
Galaxy’s newest development is set to open on the Cotai Strip in May, together with its new Broadway property, which will house a 3,000-seat theater.