Macau Seeks Revenue Model Akin to Las Vegas
Macau is the world's most dependent casino market when it comes to gaming revenue. High-ranking Chinese and Macanese officials are striving to change this.
Their aim to diversify Macau's economy and reduce gaming dependency is no secret. This perspective is also evident in the latest draft of gaming laws. According to experts, officials are looking to rival markets, like Las Vegas and Singapore, for inspiration.
In a recent report, Macquarie analysts, Chad Beynon and Linda Huang, stated that they anticipate Macau's gaming operators to evolve into the Las Vegas Strip/Singapore model, with gaming revenue contributions of around 40% and 68% respectively.
This year, wagering activities are expected to generate 83% of Macau's integrated resort revenue.
Nongaming Projects in the Works in Macau
Over the next 10 years, it's predicted that Macau concessionaires will need to invest around $15 billion in nongaming initiatives. The six license holders in Macau are Galaxy Entertainment, Melco Resorts & Entertainment, MGM China, Sands China, SJM Holdings, and Wynn Macau.
92% of these expenditures, the Macquarie analysts believe, will be dedicated to non-gaming ventures. Las Vegas Sands, which manages five Macau casino resorts, and operates Marina Bay Sands in Singapore, is an example of the operating model desired by Macau officials.
A report published by the UNLV Center for Gaming Research earlier this year reveals that Las Vegas casinos underwent a transformation from 1984 to 2022, with gaming revenues dropping from 59% to 38% of their total revenue. Despite this drop in gaming earnings, Las Vegas thrived, as room revenues increased fivefold.
In 2021, Strip casinos made $2.89 billion in food-related revenue – the second-best year in history – and $1.46 billion from beverage sales, a new high. UNLV reports that in 2022, rooms, food, beverage, and entertainment accounted for around 63% of Strip revenue, a template Macau hopes to follow.
Macau's Transition Won't Happen Overnight
It's likely that the bulk of the aforementioned spending will originate from Sands China and Galaxy Entertainment, Macau's two largest operators. Analysts contend that Sands China, a subsidiary of Las Vegas Sands, has a long history of investing in non-gaming projects.
However, it will take time – potentially several years – for Macau's reliance on casino gaming to lessen, and for the Las Vegas/Singapore model to become more noticeable in the SAR. With that said, Macau's immediate future appears promising.
The Macquarie analysts project that Macau's mass gross gaming revenue (GGR) will bounce back to 2019 levels by the end of 2023, buoyed by the removal of transportation, hotel room supply, and labor supply hurdles. The growing number of hotel rooms and resolution of transportation constraints are anticipated to draw in more tourists, improving the situation.
Read also:
- Games Industry Research: Carbon Emissions of Top Video Games
- U.S. cities with the most Swifties per capita
- Blackjack Casino Advantage: How to Beat the Odds
- Football 101: What is relegation in football?
Source: www.casino.org
