As Macau’s casino concessionaires begin their new 10-year terms, they’re on order to increase the volume of foreign guests who patronize their resorts by 100 percent. That’s just one of several big changes designed to grow and diversify the market between now and December 31, 2032.
In comments made December 16, after the Big 6 operators signed their new contracts, Secretary for Administration and Justice André Cheong told reporters, “The government will ask concessionaires to increase the proportion of foreign visitors every year, and to double it after 10 years.” Concessionaires must submit their plans to achieve the new goal in the new year.
In 2019, though Macau drew a record 39 million visitors, foreign patronage accounted for just 3.58 percent of gross gaming revenue (GGR), Cheong noted. Due to the pandemic and China’s Covid-zero policy, the total number of travelers through October was an anemic 4.94 million.
Macau is basically starting from zero, and “It will take time for concessionaires to develop foreign visitor sources,” Cheong conceded.
A “dedicated staff” will monitor investments made by the concessionaires, who have vowed to pump about US$15 billion into improvements over the next 10 years (operators will have to increase their non-gaming investment by up to 20 percent if citywide annual gross gaming revenue reaches US$22.39 billion). Most of those dollars will fund non-gaming attractions to bring in tourists from outside Mainland China, Hong Kong and Taiwan.
For example, Sands will spend $3.75 billion for a new conference facility and a luxury yacht experience that should draw foreign visitors. MGM plans to invest $2.1 billion in the areas of culture, entertainment and medical tourism. Wynn Resorts has committed $2.2 billion over 10 years for a state-of-the-art theater and new restaurants, and also will increase its promotional budget in Asia and North America to boost international tourism, per CNBC.
Melco will bring back its popular House of Dancing Water attraction, which closed at the beginning of the pandemic, and also build an indoor water park. Galaxy will build Macau’s first high-tech amusement park.
Other areas of development include maritime tourism, sporting events and the meetings and conventions business. Each year, concessionaires must submit progress reports related to their investment projects; list the projects that will be completed the next year, and state the value of the investment.
“The government does not want the scale of the gaming industry to expand indefinitely, but to control the scale of the gaming industry so that there is more room for non-gaming development,” said Cheong.
In commentary in Inside Asian Gaming, columnist Andrew W. Scott said doubling international tourism is a tall order, but not out of reach for Macau.
There’s a significant upside for operators, he added: more foreign visitors will assuage Beijing’s concerns about capital flight out of the country, and ensure a perceived “transfer of wealth from outside China to within China, something which Beijing would be delighted with!”
“If we in Macau can truly turn Macau into an internationally recognized destination and create a meaningful increase in foreign visitation (and therefore expenditure), that is absolute gold for our reputation with the central government—and could lead to a relaxation in the posture towards Macau.”
He added that the onus is not solely on concessionaires to make it happen, and the government must do its part through a “truly cooperative partnership” with operators. The operators must provide the attractions, and the government must provide “the citywide environment that will make foreigners want to come to Macau.”
He cited five factors that inhibit travel. In addition to poor infrastructure, they include “an unwelcoming environment,” a “lack of community buy-in,” and “no consistent or coherent city-wide strategy.” In the past, he said, attempts to attract foreigners have been “implemented poorly.” City signage is not bilingual, which makes it hard for foreigners to get around.
“The situation is much better in the larger resorts because of years of training to improve service quality,” Scott wrote, “but get out onto the streets and the average foreigner very quickly gets lost—both directionally and psychologically.”
More changes await, notably in the junket sector. The era of freewheeling high rollers chaperoned by junkets seems to be over, though junkets will continue to run under certain restrictions. The city’s overhauled junket law, officially known as the “Legal Framework for Operating Games of Chance in Casinos,” mandates that junkets and management companies cannot provide services to more than one of Macau’s six casino concessionaires; junket revenues will be drawn from commissions paid by the concessionaire.
The junket operations, management companies and agents may not share revenues with concessionaires and can’t accept deposits from other individuals for gaming or non-gaming activities. The “acceptance of an unlawful deposit” will be punishable by two to five years in prison.
The government will determine the number of junkets that concessionaires can work with, based on the economic picture.
Speaking before his colleagues, Legislative Assembly member José Maria Pereira Coutinho said, “Junkets can only work with one concessionaire, which is a big change, so will the government consult the junkets and work out a fair commission for them so that they can survive?”
The Secretary for Economy and Finance Lei Wai Nong, said, “The current junket commission rate is 1.25 percent (on rolling turnover) and the government is open to any change in this commission rate. The government will listen to comments from the industry and hopes that the gaming junket industry can develop healthily and normally.”
The number of gaming tables and gaming machines allotted to the city’s casinos has changed as well. The local government previously announced it would permit a total of 6,000 gaming tables and 12,000 electronic gaming machines under the new concessions.
Galaxy Entertainment Group has been issued 1,000 gaming tables and 1,700 electronic gaming machines, for a reduction of 7 percent. Galaxy previously was allowed 1,079 tables. Sands China may have a maximum of 1,680 gaming tables and 3,700 electronic gaming machines. It loses five tables, down from 1,685.
MGM China can offer 750 gaming tables and 1,700 electronic gaming machines. MGM’s previous table allocation was 552 tables, for an increase of 36 percent. SJM Holdings has been allotted 1,250 tables and 1,700 slot machines under the new concession. SJM was previously entitled to as many as 1,993 tables, meaning its total volume will reduce by 743, or 37 percent.
Finally, there will be 40 percent fewer satellite casinos in the new year, per GGRAsia. Eleven satellites will operate under the new concessions, compared to 18 satellites in June, a drop of 38.9 percent.
