Macau raises the stakes

Table minimums have risen in Macau. That’s the most noticeable change during a two week visit, covering Global Gaming Expo (G2E) Asia for Macau Business and Asia Times and surveying casino floors.

At most large casinos, it’s virtually impossible to find a HK$100 (US$13) table for baccarat, Macau’s favorite game, or blackjack. Minimums run HK$300 and up in most cases, with HK$1,000 and HK$2,000 tables quite prominent. Baccarat players looking for lower stakes are being pushed to electronic gaming terminals with live or video dealers. Or they can choose roulette or dice tables (sic bo or craps), where at most venues they can still toss a HK$50 or even HK$25 bet on a number, though the main plays are least HK$100.

The higher minimum trend prevails in both downtown Macau (aka the peninsula) and on the Cotai Strip. Some of the smaller joints on the peninsula have proportionally more HK$100 play, strictly as a function of having fewer tables. Grand Lisboa has a string of HK$100 tables that also accept Macau patacas (MOP) in one section of its ground level, near the escalators leading to the main gaming floor.

Higher table limits are one factor in the rise of what’s being called the premium mass market in Macau. These are high spending players below the VIP level, and this segment came to the fore as VIP play stagnated during the past year, before staging a recovery in recent months. In March, monthly gross gaming revenue reached MOP31.3 billion (US$3.9 billion), its first month topping MOP30 billion. A MOP40 billion month (see page 60) is on the horizon, though still a ways away.

Premium mass market and VIP play are both crucial to gaming revenue, but premium mass is more appealing to casino operators for a number of reasons, so they’ll keep focused on it, no matter what happens with VIP play. Watch Macau Business for my upcoming article on this key market segment.

Totally globalized native New Yorker and former broadcast news producer Muhammad Cohen is author of Hong Kong On Air, a novel set in his adopted hometown during the 1997 handover about television news, love, betrayal, high finance, and cheap lingerie. See his bio, online archive and more at www.muhammadcohen.com; follow him on Facebook and Twitter @MuhammadCohen.

Signs of getting it right in Macau

Club Cubic was heaving at 1.30am on the last Thursday night in November. Nearly 3,000 of the Pearl River Delta’s most beautiful people gathered on the second level of the City of Dreams resort, a space that in the past has often felt as desolate and forbidding as a New York City subway station during the wee hours. On that night, Psy, the Korean rapper behind the mega-hit Gangnam Style, was in town and Club Cubic was the place to be. Sometime past 2am, Psy took the stage, gave the crowd his song and his horse dance and galloped off, but the party continued. It was a night to remember in Macau.

During a ten day visit culminating with the late night Psy-ting, there were clear signs that Macau is creating more nights to remember for visitors from China’s growing middle class that are presently driving casinos revenue growth. For more than a year, expansion of mass market gaming has outstripped VIP growth.

According to participants at last month’s Asian Gaming and Hospitality’s Congress, mass market growth reflects Macau and mainland authorities’ push to diversify the economy away from gambling toward broader tourism and leisure activities, as I wrote in the December issue of Macau Business. Junket business insiders at the conference also offered examples of Beijing’s efforts to curtail VIP play. Whatever the reason, mass market spending is rising in Macau.

On this visit, it seemed Macau’s casinos resorts had sharpened their game as tourist destinations, getting things right more often than has been their custom. Maybe it was my imagination due to spending hours on massage tables and in whirlpools to research an article on luxury spas for the January edition of Macau Business, and enjoying five-star hospitality at their host hotels. Maybe it’s because resorts that needed to learn have had great examples to follow, such as the intelligent, comfortable room design and equipment at Grand Lisboa and the right resort elements for Asia at Galaxy Macau. But mostly, it may be that resorts, especially the ones in Cotai with huge footprints, need to have more traffic and paying customers to function and feel right. As mass market tourism grows, and more people shop, eat and play in plain sight rather than behind VIP room walls, it’s happening.

Now Macau needs to take the next step and give tourists who come for a good time reasons to stay for more than a day and keep coming back. Sure, gambling will continue to be part of the mix, but there needs to be more. Psy’s appearance underlined the thirst for entertainment. The Pearl River Delta is looking for a good time, and Macau seems finally to have figured out how to deliver one. Now let the good times roll.

Totally globalized native New Yorker and former broadcast news producer Muhammad Cohen is author of Hong Kong On Air, a novel set in his adopted hometown during the 1997 handover about television news, love, betrayal, high finance, and cheap lingerie. See his bio, online archive and more at www.muhammadcohen.com; follow him on Facebook and Twitter @MuhammadCohen.

Macau casino revenue numbers hide real news

Over the past few months, Macau casino revenues have disappointed. October’s new revenue record of MOP27.7 billion (US$3.46 billion), while welcome, represented a modest 3.2 percent increase over revenue a year ago. But behind the numbers, key changes are taking place that will transform Macau.

After years of increasing domination by VIP players provided by junket operators, for about a year mass market gamblers have been driving revenue growth. As I wrote in the October issue of Macau Business, the trend will show its biggest impact beyond the casino floor.

A related trend is the swing toward Cotai, covered in the July issue of Macau Business. Three casino operators already have resorts in Cotai, the entertainment area built on landfill between Macau’s outer islands, and this year the government has approved development applications from the other three. By the end of 2017, there will be at least six new developments in Cotai, built for some US$15 billion.

Things will surely be different by then. But Macau’s shakeup has already begun, with its effect felt as far away as Beijing and Wall Street.

Totally globalized native New Yorker and former broadcast news producer Muhammad Cohen is author of Hong Kong On Air, a novel set in his adopted hometown during the 1997 handover about television news, love, betrayal, high finance, and cheap lingerie. See his bio, online archive and more at www.muhammadcohen.com; follow him on Facebook and Twitter @MuhammadCohen.

Sands Cotai opens in falling Macau tide

The world’s biggest Sheraton hotel opened at Sands Cotai Central last week, part of the Macau resort’s second phase that includes a South Pacific themed casino and dozens more retail shops. I covered the phase one opening in April, including an up close and personal encounter with Sheldon Adelson, the chairman of Sands China and its parent company, Las Vegas Sands.

I’ll be writing more about Sands Cotai Central (SCC) for Asia Times and about Macau casino trends for Macau Business magazine in the weeks ahead.

Until then, consider that SCC has opened into the teeth of a rare run of slowing casino revenue growth in Macau. The situation resembles conditions facing the 2009 opening of City of Dreams, SCC’s neighbor on the east side of Cotai’s main boulevard, across the Venetian Macao.

In 2009, the main problem was restricted visas for mainland travelers. In the three years since, Macau has become even more dependent on mainland visitors, and now it’s seeing slowing growth in step with China’s decelerating economy. For better or worse, analysts see Macau resorts becoming more closely tied to the mainland economy in the years ahead. Rather than spreading their bets, it seems Macau’s casinos have doubled down on the mainland.

Totally globalized native New Yorker and former broadcast news producer Muhammad Cohen is author of Hong Kong On Air, a novel set in his adopted hometown during the 1997 handover about television news, love, betrayal, high finance, and cheap lingerie. See his bio, online archive and more at www.muhammadcohen.com; follow him on Facebook and Twitter @MuhammadCohen.

Shot down by Chairman Sheldon

Covering the Sands Cotai Central opening on April 12 included attending the news conference with top executives of Sands China and its parent company Las Vegas Sands (LVS). That put me squarely in the sights of the billionaire chairman of both companies, Sheldon Adelson.

During the question and answer period, I introduced myself as Muhammad Cohen from Asia Times and Macau Business, then asked company executives whether they regretted their decision in the face of the 2008 credit crunch to continue building Marina Bay Sands in Singapore while mothballing Sands Cotai Central, initially slated to open in 2009. The Wall Street-led crisis drove LVS to the brink of bankruptcy, requiring a $2 billion lifeline from Adelson. Marina Bay Sands, which cost nearly $6 billion, has become the most profitable casino resort in the world in operating terms. With its delay, Sands Cotai Central has cost $4.4 billion, making it Macau’s most expensive resort to date.

LVS president and chief operating office Michael Leven explained that Marina Bay Sands was already fully financed before the crisis hit, while Sands Cotai Central was only partially funded, based on lenders preferences for the two projects. “I regret that we didn’t complete [Sands Cotai Central] two-and-a-half years ago, because Macau would now be further ahead,” Leven added. “We’re really happy to be able to open it today. This puts the exclamation point at the end of the sentence. It’s a game changer for MICE [meetings, incentives, conventions and exhibitions] in Macau.”

As I furiously scribbled what Leven had said, I heard Chairman Adelson say my name as he unloaded with both barrels.

“I’ve read what you’ve written, Muhammad, and it’s not true,” the 78 year old worth $24.9 billion said. “We didn’t take the money from Macau to Singapore. Not a single pataca, not a single penny went from here to Las Vegas, or from here to Singapore.”

There’s not much I could say in response to that kind of public shoot-down, particularly when it comes from the most powerful man in the global gaming industry, accompanied by his band of security guards. And especially since I never wrote what Adelson said I did.

The charge that LVS has used its Macau profits elsewhere has been raised. Macau Business made reference to that sentiment when it reported Adelson’s earlier “not one pataca” denial a couple of years ago, But I’ve certainly never written that LVS is taking money from Macau for projects elsewhere. The real issue, which neither Leven nor Adelson addressed, was the local political damage done. A lot of people remember that LVS continued work in Singapore while pausing in Cotai during Macau’s moment of crisis, the one time during the company’s Macau tenure when the city really needed the construction jobs and related commerce. Macau also presents a far more important long term opportunity than Singapore, where revenue growth has already shown signs of stagnation and government regulations restrict opportunities.

I spent the rest of Sands Cotai’s opening day basking my ill-gotten notoriety, refuting my culpability to all I met, from Sands China president and CEO Edward Tracy to analysts who suddenly recognized me. “At least he knows your name,” several consoled me.

Sipping champagne ahead of the black tie gala dinner (to which my invitation must have been lost), I managed to issue my denial to Dr Miriam Adelson, the chairman’s wife during the course of a delightful chat. I hope she passed the word to the next pillow.

Totally globalized native New Yorker and former broadcast news producer Muhammad Cohen is author of Hong Kong On Air, a novel set in his adopted hometown during the 1997 handover about television news, love, betrayal, financial crisis, and cheap lingerie. See his biography, online archive and more at www.muhammadcohen.com.

Singapore lifts the lid on gambling junkets

My report on Singapore’s decision to license two Malaysian junket promoters is in the April issue of Macau Business. Buy the magazine at fine news dealers throughout Macau and Hong Kong or look for it online at Macau Business Digital later this month, where every issue is archived.

I’m currently in Macau for the opening of Sands Cotai Central and will cover the event for Asia Times. I’ll post some further impressions here after that article is published.

Singapore Business Review also asked me to comment on the city-state’s initial licensed junket operators, or as Singapore’s Casino Regulatory Authority prefers International Marketing Agents (IMAs). The article was posted this week with my edited comments and those of other experts this week.

Here’s a full transcript of my comments to SBR:

“The decision to license two small junket promoters reminds me of Singapore bringing in the Crazy Horse topless show. It’s a way for the authorities to provide evidence that they’re willing to take risks through a virtually meaningless gesture.

What’s most revealing is that eight years after the authorities decided to embark on casino legalization and two years after the first casino opened its doors, with no licenses granted to junket promoters and thus no experience of seeing how junkets would operate in Singapore, the regulator thought that it needed to issue more stringent rules. That belies the common notion of Singapore as a well-run, transparent jurisdiction with smart people in charge.

Licensing more junkets would relieve the official schizophrenia over high rollers. On one hand, Singapore taxes their gaming revenue at 5 percent [vs 15 percent for mass market play], but on the other hand, it won’t license any agents to bring them to the casinos. Throughout Asia, junkets are an important part of attracting VIPs – casinos can’t duplicate junkets’ overseas outreach efforts and range of services. As veteran gaming consultant Mike Gore told me, “Junkets work hard for their money.” They know their market, they know their customers, and they speak their language. All of that matters.

Having more junkets doesn’t mean being less particular about who gets licensed, but it does mean doing the job faster and more efficiently. Right now, applicants need to supply vast amounts of information including a 40 page application form with no guarantee of a timely response. Surely, the government can do better than that.

The casinos have always been about bringing in foreign high rollers, so you’d hope the authorities would get more proactive about it. Rather than just sitting around waiting for applications and processing them at the glacial pace, why not reach out to honest businesses in related fields and encourage them to become IMAs. There may be some regulatory hurdles, but why not consider having junket promoters linked to overseas branches of DBS or Singapore Airlines? If you want an honest casino industry, then encourage honest companies to find ways to participate scrupulously and profitably.

For that same reason, Singapore should publish comprehensive gaming revenue statistics, as Macau does, to help other companies better understand what’s happening in the casinos and where the opportunities may be.”

Totally globalized native New Yorker and former broadcast news producer Muhammad Cohen is author of Hong Kong On Air, a novel set in his adopted hometown during the 1997 handover about television news, love, betrayal, financial crisis, and cheap lingerie. See his biography, online archive and more at www.muhammadcohen.com.

Rolling the dice in Thailand

Renowned novelist Christopher Moore has written with his usual insight on illegal gambling in Thailand. The longtime chronicler of Thailand notes the king-sized hypocrisy of police denying the existence of illegal gambling despite estimates of up to 1 million illegal gambling establishments in Thailand and, more to the point, bribes to police in connection with illegal betting of up to 8 billion baht ($275 million).

Moore suggests legalization of the estimated $12 billion underground industry, along with education on mathematical probabilities to counter Thai beliefs in luck and spirits tied to gambling. “Probability will teach children that there is no luck, no belief system or supernatural force that will intervene on your behalf in gambling,” Moore, perhaps best known for his Vincent Calvino crime novels and Land of Smiles Trilogy that all draw heavily on his understanding of Thai history and culture, says.

I interviewed Moore and several other knowledge sources for a report on prospects for casino legalization in Thailand in the February issue of Macau Business. International gaming companies have long salivated over the prospects of bringing casinos to Thailand. The combination of Thailand’s gambling-keen population of 65 million and more than 15 million foreign visitors make it the juiciest plum in Southeast Asia currently without legal casinos. But political and religious opposition have so far trumped the commercial opportunity. Groups that benefit from illegal gambling, including corrupt politicians and police, also oppose legalization. There’s also fear among some in the tourism industry that gambling could diminish Thailand’s appeal to visitors.

After the Thai general election in July, I wrote about whether the return of allies of ousted prime minister Thaksin Shinawatra, a supporter of gambling legalization, will help bring casinos to Thailand. Yingluck Shinawatra and her Phue Thai party have the difficult task of healing the rifts in Thai politics that widened after last year’s Thaksin loyalist Red Shirt occupation of Bangkok and subsequent crackdown that left 91 dead.

Christopher Moore says it’s time to get practical and make gambling legal. But the odds remain stacked against it until Thais find common ground on less divisive issues.

Totally globalized native New Yorker and former broadcast news producer Muhammad Cohen is author of Hong Kong On Air, a novel set in his adopted hometown during the 1997 handover about television news, love, betrayal, financial crisis, and cheap lingerie. See his biography, online archive and more at www.muhammadcohen.com.