Asia’s largest gaming exhibition began in Macau yesterday but concerns are growing that rising labor costs and infrastructure hurdles could test the territory’s stellar economic growth.
More than 6,000 gaming professionals from around the world are expected to converge on the giant Venetian casino resort for the Global Gaming Expo Asia (G2E Asia) 2008, double the number from last year, organizers said.
The three-day event will showcase the latest slot machines, security software and equipment, and gaming devices from more than 180 international suppliers.
To coincide with the start of the expo, a survey of trends in the Asian gambling market predicted that gaming revenues in the region would overtake those of the US by 2012.
The expo, however, comes as Macau strains after years of spectacular growth, which the government last year said took its revenues above US$10.34 billion. This exceeded the Las Vegas Strip and was just shy of the wider Las Vegas area.
But Gabriel Chan, gaming analyst at Credit Suisse in Hong Kong, said growth is set to slow significantly in the next few years.
One key factor is a worker shortage that has driven up labor costs to the equivalent of 11 percent of total gaming revenues, a substantial proportion operators have to reduce, Chan said.
“Importing laborers from mainland China would address the problem,” Chan said. “However, it will also drag down the pay levels of Macau people and so the government will definitely not consider the move in short term.”
Macau in recent years has suffered from labor protests by workers concerned about the influx of Chinese and foreign employees and downward pressure on wages.
Chan was unconvinced that casino resorts would be able to diversify their sources of revenues by bringing in shows that have worked well in Las Vegas.
“How many mainland Chinese gamblers are going to spend US$1,000 on a Cirque du Soleil show rather that on the baccarat? The idea is questionable,” he said, referring to the Venetian’s resident show that opens in August.
US casino giants, such as Las Vegas Sands and Wynn, have already made strong returns in Macau.
Another 15 casinos will open in the next four years, Las Vegas-based casino strategy consultancy Globalysis said in a report released last month, raising questions of oversupply and stretched infrastructure.
However, more than 80 percent of 23 casino executives, academics and analysts interviewed in the survey released yesterday said it was very likely (67 percent) or somewhat likely (17 percent) that gaming revenues in Asia will surpass those of the US by 2012.
Forty-five percent of respondents predicted that Taiwan would be the next Asian country to legalize casino resorts, while 24 percent chose Japan and another 21 percent opted for Thailand.
However, 78 percent of respondents thought it would take at least seven years before electronic slot-machine games would generate as much revenue as table games in Asia.
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