China’s crackdown on cross-border gambling, capital flight and junket operations has put a crimp in VIP travel to gaming markets like Singapore, the Philippines, Australia, Cambodia and South Korea as well as Macau.
For the near-term and perhaps indefinitely, operators in those markets will have to look elsewhere for high-value players.
Kevin Clayton, integrated resort specialist for consultancy Megabrands Asia, told GGRAsia it will be a tall order to fill those vacancies, especially in Macau, which has spent a decade-plus cultivating wealthy Chinese players.
The Covid-19 pandemic has exacerbated the problem. Beijing’s “zero-Covid” policy has limited travel to and from Macau, the Chinese Mainland and Hong Kong. That forced Macau gaming operators to burn cash to maintain their operations.
Additionally, on March 1, 2021, China amended its criminal code to make it illegal to facilitate gambling tourism by the Chinese to other countries. “VIP customer acquisition and financing through traditional junkets is now a thing of the past,” said Clayton.
He added: “A battleground in Asian markets will be Chinese and Korean expats living, working and owning businesses in [the destination] market – particularly in Korea and Vietnam, where locals are banned from entering foreign-owned casinos.”
Jit Ng, chief marketing officer for Hoiana, a casino resort in Vietnam, agreed that operators must pursue a “broader” clientele.
“Our strategy has always been about striking a balance in our customer base due to the attractiveness of Da Nang as a major tourist spot not only for Chinese, but also for Koreans, Malaysians, Japanese and Singaporeans. These markets have always been important to us, and our balanced approach have been effective in bringing in valuable customers,” Ng said.
“When it comes to volume, one needs to recognize that the VIP volume seen previously in Macau no longer exist in today’s market so it comes down to driving our strategies in mass and premium mass” play, he continued.
Clayton added, “The challenge lies in the limited number of premium gamblers, all being targeted by multiple operations. The chief targeted feeder markets are likely to be South Korea and Japan, “with Vietnam and Thailand also now of interest.
“The number of higher-value casino gamblers from each country will be small by comparison, and the majority of gamblers are unlikely to play anywhere near the level and frequency of China VIP and premium mass” clients. “VIP and premium customer-acquisition in these Asian markets is a slower process, but these are important gaming markets nevertheless. ”
He added, “Casino resorts need to ensure their food offering, resort attractions, signage, communications and ‘customer journeys’ can best attract and serve Japanese, Korean, Vietnamese and Thai visitors.”
At G2E Asia last week, Morgan Stanley Asia analyst Praveen Choudhary said the value of the high-roller segment has dropped from “US$20 billion to US$4 billion” since 2019. The brunt of that decline was felt in Macau, which in 2019 had accounted for about 67 percent of the Asia Pacific VIP segment, according to the data presented by the analyst.
“The reason this market has been lost, is that these were very high end Chinese consumers who used to come to Macau,” Choudhury said. Much of this VIP business “in my view, has been lost forever. It may not come back because the junkets will not be allowed to operate the way they have been operating in Macau previously.”
