Grand Lisboa Palace evokes SJM founder Stanley Ho’s vision of Macau as Asia’s Monte Carlo. (Photo: Muhammad Cohen)
Once again the world’s casino revenue leader, Macau has entered a brave new world of new properties, new policies, no large scale junkets operations and a focus on non-gaming spending.
Meanwhile June gross gaming revenue of US$1.9 billion makes the first half tally 53.6% of 2019, up from 52% through May, but still well short of the post-pandemic boom in the US, Philippines and Singapore. Macau is moving in the right direction, but still has a long way to go.
During its five-plus years of operation, mostly as a temporary casino in a shopping mall, Imperial Pacific reported larger VIP gambling volumes than top Macau casinos on a fraction of the tables.
Now, IPI only leads the casino world in uncollected debt. According to figures from the UNLV Center for Gaming Research, over the past four years, the largest casinos on the Vegas Strip averaged $2.35 million in bad debt. IPI’s annual uncollected player debt ran more than 100 times higher. Bad debt on the Strip averages 1% of gross gaming revenue; for IPI, it accounts for more than 70% of reported GGR.
IPI’s crystal dragons, measuring 60 meter and 40 tons, may be auctioned to pay its creditors. (Company provided photo)
There’s speculation as to whether IPI produced those figures as part of a scheme for money laundering, share price manipulation – IPI is listed on the Hong Kong stock market, though trading has been suspended since April last year – a ploy to sell casino sublicenses for its purported US$7 billion Saipan Strip development, or just due to rank incompetence.
At its most basic, IPI demonstrates how difficult it is to create a viable casino in a jurisdiction of fewer than 50,000 inhabitants four hours from the nearest major source markets. Yet, many in CNMI, especially among the political class that licensed IPI in defiance of public opinion and local law, want to bet on casino gambling in Saipan again.
Proposed New York City casino sites include Times Square in a renovated office building.
I visited Singapore last week for the G2E Asia gaming conference and trade show, held at Marina Bay Sands. MBS remains the most impressive and profitable casino resort on earth, symbol of a Singapore that’s grown past chewing gum bans. Crosstown rival Resorts World Sentosa draws domestic and international visitors with Universal Studios and other attractions.
Casino licenses on offer for New York City and vicinity should inspire similarly sensational integrated resorts. But the licenses will likely produce no-frills cash boxes, bringing the city more of what it doesn’t need. Without a major policy rethink, the city will be better off without them.
Pagcor – the government owned Philippine Amusement and Gaming Corporation – and its licensees generated nearly US$4 billion in gaming revenue last year. The Philippines could overtake Singapore as Asia’s second largest gaming market behind Macau with domestic economic growth and revived travel across Asia.
Local election that began Sunday mark the latest milestone that could trigger a decision on Japan’s casino license applications. The current legalization push has gone on for a decade, with two applications from Osaka and Nagasaki submitted last April for three available licenses.
So far, there’s been no indication of when the national government evaluation process will finish. Sources in Japan expect decisions will be announced in months, if not weeks, with the strong possibility of a new round of bidding for unawarded license(s) to follow the decision. But the smart money likely would have said the same thing a year ago.
No sunset in sight for Philippine Offshore Gaming Operators (POGOs) targeting mainland China. (Photo by Muhammad Cohen)
In 2019, 1.7 million Chinese tourists came to the Philippines, spending an estimated US$2.3 billion dollars. China Outbound Tourism Research Institute CEO Wolfgang Arlt estimates nearly 1.2 million Chinese travelers will visit the archipelago this year, heavily back loaded toward the second half. That’s about two-thirds of the 2019 total of 1.74 million.
Philippine offshore gaming operators (POGOs) continue targeting mainland China, and it may cost the island nation couple pay a steep price. China claims it has a secret travel blacklist for countries that encourage its citizens to gamble, and a Philippine senator says his country is on the list. If that’s true, the cost of POGOs would be exorbitant.
On spending, Arlt says, “Nobody has a reliable way for a forecast.” China’s rich saw a 10% wealth decline during the pandemic, but pent up demand could overcome that loss, at least temporarily. Conservatively, Chinese travelers would spend US$1.3 billion in the Philippines this year, unless the blacklist stops them from visiting. Weigh that against the estimated US$80 million in government revenue and plus reported illegal activities that POGOs generate.
The end of China’s Zero Covid policy and new concessions for Macau’s incumbents don’t signal the end of its problems. The once and future top global casino destination faces a Beijing regime that’s skeptical, if not downright hostile, toward gambling. Switching Macau betting to mainland China’s currency, the renminbi, might help assuage concerns over funds illegally leaving the mainland via casinos.
Even in extremely challenging times, Macau got seven bidders for its six casino concessions. Unfortunately, authorities didn’t use their leverage wisely to clean up a glaring conflict of interest and remove an underpeforming licensee.
Promised casino operator non-gaming investment will be most effective if targeted toward comprehensive efforts among all stakeholders to boost Macau’s destination appeal. But absent a government mandate, don’t bet on that happening.
Batumi, the Vegas of the Black Sea in Georgia, has 11 casinos, an attractive seaside plaza and big ambitions. (Photo credit: Muhammad Cohen)
As Asian gaming remains muted with its post-Covid prospects murky, the time seems ripe for integrated resorts in Europe. Hard Rock International, Melco Resorts and Cordish are developing IRs a decade after Sheldon Adelson proposed creating EuroVegas in Spain with multiple resorts, casinos, golf courses and thousands of hotel rooms.
VIP room in Casino International at the Batumi Hilton. (Photo provided by Casino International)
Europe already has hundreds of casinos, most catering to local markets, along with a handful of gaming destinations with wider reach. Batumi, Georgia’s Black Sea Vegas, drawing customers from neighboring Turkey and the Middle East, has attractive casinos in international branded hotels, dramatic surroundings, great food and wine, plus expansion ambitions.
Muhammad Cohen 