Research on Macau gaming in the post-pandemic era suggests the industry may never return to pre-pandemic growth levels, but should be stable over the next 10 years.
A report in Global Gaming & Tourism Research, a publication of Macau Polytechnic University, says the world’s most profitable gaming market may have reached capacity after decades of transformative growth.
Study author Wang Changbin of the Center for Gaming and Tourism Studies, said the 45-square-mile special administrative region (SAR) has limited available land for future development. In addition, new casinos planned in the vicinity are likely to inhibit the domestic industry. The decline of the VIP industry also will be a dampening factor.
With tighter restrictions on junkets, Wang wrote, “most gaming promoters have stopped promoting in the (Chinese) mainland, leading to a sharp decline in gaming revenue from third-party VIP rooms, dropping from 55 percent in 2018 to 24 percent in 2022. While junkets are actively seeking new clients from other regions, it will take time to see significant results.”
According to Asia Gaming Brief, the scholar also noted the trend away from VIP revenues to mass gaming. In 2019, total gross gaming revenue (GGR) in the jurisdiction was US$36.4 billion, with VIP revenue contributing $16.8 billion, or 46.2 percent. Last year, total GGR reached $22.8 billion, and VIP came in at $5.6 billion, just under 25 percent.
He acknowledged the positive factors as well, writing, “Macau’s gaming market has a clustering effect. In other countries, a region might have one or two casinos, whereas in Macau, there are dozens of casinos within a few square kilometers. Besides offering a wide variety of gaming activities, these casinos provide different entertainment, dining and performance services, giving tourists a convenient and superior service experience.”
Moreover, “Macau is politically, socially, and securely stable, ensuring that tourists do not worry about personal and property safety. These factors uniquely attract visitors.”
He projected stable growth through 2034, given stability in the mainland economy, according to AGB.
Meanwhile, the shift to mass means “non-gaming elements are increasingly important for gaming operators,” Wang wrote—in line with the local government’s commitment to building a more diverse, resilient economy.
“VIP guests tend to focus more on gambling activities, while general tourists also engage in sightseeing, shopping, dining and leisure, with gaming being just one part of their experience. Therefore, the convenience, comfort, novelty and price attractiveness of accommodations, dining and entertainment are key to attracting customers.”
As a condition of their new gaming 10-year gaming concessions, which began on January 1, 2023, Macau’s Big 6 casino concessionaires agreed to invest about $13.5 billion on new amenities, with the emphasis on non-gaming.
It could already be working. A new study by Seaport Research Partners says non-gaming attractions will contribute about 15 percent of concessionaires’ revenue this year, which will help to “wean the SAR off its dependence on gambling,” according to the Macao News.
Seaport analyst Umansky said the industry’s long-term growth should be stable. “We do not see a slowdown and change in propensity to gamble by the core Macau customer base,” he wrote, “and Macau remains the funnel for servicing gaming demand in Greater China.”
