Leong: “Like a body checkup”
The mid-term review of Macau’s gaming industry, conducted by the Institute for the Study of Commercial Gaming of the University of Macau and released last week, gave good marks to the city’s six casino concessionaires on some points, and pointed out areas for improvement as well.
On the plus side: operators were all found to have “fulfilled the capital commitments in their contracts” with the six investing more than MOP262.31 billion (US$32.82 billion) in the SAR from 2002 through 2014.
But Secretary for Economy and Finance Lionel Leong said the results will have little impact on which concessionaires will see their licenses renewed beyond 2020 and 2022, when they expire.
“We have to be very cautious,” he said. “We need to know what steps we will take to guarantee our competitiveness in the global arena … and have better soil for the healthy growth of the gaming industry.”
The casinos seem to be succeeding, albeit slowly, in the shift toward mass-market revenues. According to Bloomberg News, mass will account for more than 50 percent of gaming revenue this year.
“Mass market revenue has been stabilizing for a year now and was only down 4.8 percent vs. VIP down 19.3 percent,” said Catherine Lim and Margaret Huang, speaking at G2E conference in Macau, and non-gaming revenues are also inching up from the current 7 percent of visitor spend. The government has set out a goal for operators to reap 9 percent of their total income from non-gaming attractions by 2020.
The mid-term review covers nine research topics and four categories, reported the Macau Business Daily, chief among them the economic and social impacts of the industry as well as job creation. Researchers found that along with the positives, there have been drawbacks to the growth of the industry, such as a rise in inflation, housing prices and business operating costs and social costs such as problem gambling.
Leong emphasized the need for more kinds of attractions that will generate independent revenue and attract a more diverse pool of visitors. “We very much hope to have more tourist products suitable for the family,” he said. “In the past we only looked at gaming revenue. We cannot only depend on a small number of (VIP players) to generate most of the revenue. We need to have new clients.”
Another “problematic area” cited in the report is the junkets that historically have brought high rollers to casinos, set up their lines of credit, and arranged their travel and accommodations.
Paulo Martins Chan, director of the Gaming Inspection and Coordination Bureau (DICJ) said the SAR is heightening oversight of the sector by increasing the capital requirements for junkets, demanding greater transparency in terms of staff, and considering establishment of a credit database that will flag risky gamblers. Chan said 35 operators fell short of the government’s requirements and guidelines since last year and their licenses weren’t renewed.
Leong called the review “like a body checkup report. It is a review report in order to know where we are.”
Gaming licenses for operators in the city are set to expire in March 2020 for SJM Holdings Ltd. and MGM China Holdings Ltd., and in June 2022 for the remaining four: Sands China Ltd., Wynn Macau Ltd., Galaxy Entertainment Group Ltd. and Melco Crown.
