27 June 2019
President Xi Jinping's campaign against corruption and lavish spending is having a deep impact on the city's gaming industry. Photo: Bloomberg
President Xi Jinping's campaign against corruption and lavish spending is having a deep impact on the city's gaming industry. Photo: Bloomberg

How Macau casinos deal with slow business

Macau celebrated the 15th anniversary of its return to Chinese sovereignty over the weekend, and as it looks into the future, the territory realizes that it can no longer depend on gaming as the single force to drive its economy.

Even President Xi Jinping, during his visit to Macau to mark the event, told its officials that the territory needs to diversify its economy.

Xi’s campaign against corruption and lavish spending has been having a deep impact on the city’s gaming industry. Officials and many of the high-rolling gamblers are now shying away from its casinos and hotel suites for fear of getting caught on the crosshairs of anti-graft investigators.

For December, casino revenue is expected to reach 23 billion to 24 billion patacas (US$2.9 billion to US$3 billion), which would represent a plunge of 28 to 31 percent from the same month last year.

Some analysts expect the slowdown to persist. International credit rating agency Fitch Ratings sees gaming revenue falling 4 percent next year, mainly because of a slump in VIP business, which typically accounted for two-thirds of the city’s annual gaming revenue in the past years.

Casino workers are bearing the brunt of the lacklustre business.

During their heyday, Macau casinos were as crowded as morning markets. It was common for casino operators to hire many “PR executives” to assist clients in VIP rooms. The monthly take-home pay of these PR staff could reach as high as 30,000 patacas.

Many dealers quit to become PR staff. But as VIP business slows, casinos no longer need so many such PR executives, and many of them find it hard to go back to their old jobs.

The lacklustre business has also prompted casino managers to look for ways to save costs.

MGM Macau has permitted over 200 workers to have their day off on the same day. It also encourages dealers to work for only three to four days a week.

The city is also trying to look for revenue sources other than gaming.  It plans to turn itself into a Las Vegas-like tourist destination, focusing on providing family entertainment as well as convention and exhibition business to fill its high density of luxury resorts.

At present, non-gaming activities only account for about 10 percent of total casino revenue, according to Macau Business Daily.

In Las Vegas, by comparison, food and beverage, hotel rooms and other attractions contributed as much as 45 percent of total revenue last year, data from the Gaming Control Board in Nevada showed.

MGM Macau is beefing up its F&B operations and adding more retail outlets inside the casino — even on the gaming floor.

So it won’t be surprising to see more casino operators adding new features to their gaming business in the future.

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EJ Insight writer

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