Casino industry leaders met in the world’s biggest gambling hub of Macau yesterday for the Global Gaming Expo Asia, a three-day fair of gambling innovations at the glitzy Venetian Macau hotel.
The largest gaming event in Asia, showcasing the industry’s latest products, services and technologies, is taking place amid a decline in growth rates in the former Portugese colony’s gaming industry as China’s economic boom slows.
The gaming sector has however boomed in Asia over the past decade, led by Macau, which now generates six times the gambling revenue of Las Vegas thanks mainly to high-rolling Chinese VIPs.
Singapore, the Philippines and Vietnam are also staking their claims to regional market share, with several mega-resorts in the pipeline.
However, despite increasing competition from the region and slowing growth rates, industry leaders remain confident in the gaming future of Macau.
“You’ve got tremendous growth here,” said Frank Fahrenkopf, president of the American Gaming Association, which organized the event.
“As new facilities open, more and more people will want to come to see the new facilities ... it adds to the dynamism and the attractiveness of Macau,” he said, pointing to a record growth in gaming revenues in March and new casinos opening in the territory.
“It depends on the ability of different operators to see who can produce the best product that’s going to appeal to the 60 percent of mainland Chinese who come here, and innovation will determine who the winners are,” he said.
Hong Kong-based Richard Huang, a gaming analyst at CLSA brokerage, believes growth for casinos will be limited in the coming years due to slower gains in the VIP segment, which accounts for two-thirds of the total revenue for Macau’s gaming industry.
“VIP gaming revenue can no longer generate such type of rapid growth, partly because of all the shutdown on corruption that’s happened in China,” Huang said.
The recent Chinese leadership change is “one of the key reasons why” VIP markets are not growing as much as they were 12 to 18 months ago, he added.
“We’re not seeing a collapse in terms of VIP gaming revenue growth. [But] definitely it’s putting a cap on the magnitude of growth in that segment,” Huang said.
The VIP segment in Macau has grown by more than 10 percent this year so far.
CLSA brokerage is expecting close to US$40 billion in revenues in Macau this year. This would represent growth of approximately 14 percent for this year, the same as last year, a significant drop from 2011’s growth of 42 percent.
Six firms are licensed to operate casinos in Macau, which has boomed since the territory liberalized its gaming industry in 2002.