Macau's Casino Industry

[HenryTo]

As rffrydr often talks about, "nothing is obvious." There are actually two forces at work here: 1) explosive increase in revenues has not translated into higher net income or higher margins, and 2) The Asian slot machine business has disappointed greatly because many casinogoers are simply not interested in playing slots. Finally, I have no idea who would go to a Beyonce concert in Macau. Much better to bring in "locals" like Jacky Cheung or Andy Lau.
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FEATURE-Penny drops for slot makers in tough Macau market
Thu Jun 5, 2008 1:04am EDT

By Dominic Whiting

MACAU, June 5 (Reuters) - Dragons dance across slot machines, virtual horses gallop on giant screens to Chinese commentary and a baccarat game makes gamblers feel impossibly tall by peering down the cleavage of a computer-generated croupier.

Slot machine makers are trying almost anything to crack Macau's $15 billion gaming industry and get a foothold in Asia.

But for a market that seemed a one-way bet, the going is proving surprisingly tough.

Although Macau wants to draw the masses who will pour cash into slots for hours, casinos are ratcheting up a battle for high-rollers who love baccarat -- on real tables.

Machines, modified for the Chinese market, are giving way.

"Casino operators in some cases are moving slot machines from the floor," said Mark Yoseloff, chief executive of Shuffle Master Inc (SHFL.O: Quote, Profile, Research), which makes slots, card shufflers and readers.

"I don't now if it's a short-term or long-term issue," he said at a gaming machine fair in Macau this week. "If we were only in the slot machine business, I'd be concerned."

With a hotel and casino building boom underway since Macau ended a four-decade gaming monopoly six years ago, the territory zoomed past Las Vegas in terms of gaming revenue in 2006 and is forecast to rake in around $14.6 billion this year.

Slot machines account for just 4.6 percent of Macau's gaming revenues, compared to around 80 percent in Las Vegas, suggesting huge scope for growth. In addition, casinos typically keep 2.5 percent of what gamblers spend on tables, but 8 percent of the money poured into slot machines.

But the hordes of mainland Chinese gamblers crossing into the former-Portuguese enclave are addicted to baccarat, a simple card game where the winning hand totals closest to nine. And high-rollers, who gamble upward of $100,000 a visit, still account for three-quarters of casino income.

A move by the Crown Macau casino, owned by Melco PBL Entertainment (MPEL.O: Quote, Profile, Research), to ditch 350 slot machines to make room for tables raises doubts over forecasts that the number of slots in Macau will more than treble in three years to 35,000.

PROWLING JUNKETS

Once derided for its awkward location, Crown struck gold when it signed a deal last year with A-Max Holdings (0959.HK: Quote, Profile, Research), a firm that deals with many gambling tour operators, known as junkets.

Its share of Macau's VIP market quadrupled to 25 percent within a couple of months and revenue nearly trebled between the last quarter of 2007 and the first three months of this year.

With junkets prowling gaming floors for new customers, other casinos are getting into similar deals, which include setting aside tables for high-roller groups.

At Las Vegas Sands' (LVS.N: Quote, Profile, Research) Venetian casino, a move to pay junkets less sent VIP revenues plunging 23 percent in the first quarter.

"There's a different mindset here. Tables are where the money is," said Matthew Ballesty, head of slots operations at the Crown Macau. "But it certainly can change on the toss of a coin."

Machine makers are hoping that completion of hotels, casinos, shops and entertainment venues on the Cotai Strip -- a planned "neon alley" on reclaimed land that fuses two islands -- will turn Macau into a Las Vegas-type mass market.

With perhaps $500 million of Macau contracts up for grabs, they argue that casinos should use slots to counter a squeeze on table margins by junkets and increased competition.

New casinos slated for countries such as Singapore, Vietnam, India and Cambodia could also prove a boon for slots makers.

BEYONCE WHO?

Progess in Macau has been hard won so far. Slot revenue grew 74 percent in the first three months of 2008, against 60 percent growth in total gaming income.

"No doubt the market has become very competitive," said Ken Jolly, Asia Pacific general manager at Australian machine maker Aristocrat Leisure Ltd (ALL.AX: Quote, Profile, Research).

"Casinos are all focused on increasing revenue from slots and putting the newest products on floors," he said. "The slot departments are working as hard as the table guys."

Having sold nearly 2,600 machines to the Venetian, Aristocrat has a 55 percent share of Macau's slot market, and Jolly expected that to climb as he tries to hatch deals with Melco's planned City of Dreams casino and other new hotel-casinos.

Kurt Quartier, Asia head for International Game Technology (IGT.N: Quote, Profile, Research), which controls about a fifth of Macau's slot market, said a labour shortage would help sell more machines.

Some analysts estimate Macau will need 50,000 croupiers in the next couple of years, a tenth of the population, each making about $23,000 a year.

"Every croupier has to be Macanese, and there's only a certain amount to go around," Quartier said.

Macau is also trying hard to give Las Vegas-style entertainment to spawn a mass market clientele. The giant Venetian casino has held concerts by big name entertainers such as The Police and Beyonce Knowles, and last week unveiled a new $150 million Cirque du Soleil show.

But there are no guarantees the model will catch on.

"I told my staff I was going to a Beyonce concert," said Ballesty at the Crown casino. "They said 'who's Beyonce?'".

[HenryTo]

Macau ramps it up further as Sheldon Adelson adds a fourth casino in the former Portuguese colony.

http://www.bloomberg.com/news/2012-03-29/macau-casino-owners-bet-everyone-wins-as-adelson-expands-retail.html

[HenryTo]

Morningstar on the latest developments at MPEL and Macau:

[rffrydr]

Macau 2009 Casino revenues were up a record 10% -- clear sign of recovery in Asia-- or, maybe visa policy.
_________________
Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Wynn lists 25% on HK exchange in effort to "go native." Visas from Guandong have been loosened from once a quarter to once a month.

Stevie only leaves 5 million in this kitty however.
_________________
Today is the Tomorrow you worried about Yesterday!

[rffrydr]

Ho's "City of Dreams" opens:

http://www.cnbc.com/id/15840232?video=1138740470&play=1
_________________
Today is the Tomorrow you worried about Yesterday!

[HenryTo]

The performance of Macau's "City of Dreams" over the next three months will be a focus for many analysts who have been tracking Macau's casino industry over the last few years:
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City of Dreams hopes to end Macau nightmare
AFP - Tuesday, June 2

MACAU (AFP) - – The latest giant Macau casino complex, City of Dreams, opened its doors Monday, a high-stakes test of whether a reclaimed swamp in the gaming haven can avoid sinking into obscurity.

Backed by scions of two gaming dynasties, the 2.4 billion US dollar complex will eventually offer more than 500 casino tables and 1,500 gaming machines, as well as top-end restaurants, shops, hotels and a lavish entertainment venue.

The grand opening was marked by a huge fireworks display, while hundreds of punters queued to try their luck at the new tables.

City of Dreams will be the only casino to open in the former Portuguese colony in 2009 after six years of frantic construction.

It is being seen as a barometer of whether the reclaimed Cotai Strip can emulate its more famous relation in Las Vegas.

"With more quality attractions... and more diverse entertainment, I think gone are the days where our visitors are purely here for gambling," said Lawrence Ho, one of the backers of the new project and son of Macau's original gaming tycoon, Stanley.

City of Dreams is owned by Melco Crown Entertainment, a joint venture between Lawrence Ho and James Packer, son of the late Australian media and gambling magnate, Kerry.

The two joined together Monday for a guitar-smashing ceremony to mark the opening of the complex's Hard Rock Hotel.

Macau already takes in more gaming dollars than Las Vegas and Atlantic City combined on the back of a rush of deep-pocketed Chinese gamblers.

But worries over money laundering, corruption and unease about Chinese cash being vacuumed up by foreign operators led mainland authorities last year to stem the flow of visitors.

Gaming revenues dropped sharply, along with the share prices of the six companies with licences to operate casinos in Macau.

The slowdown cast doubt on the future development of the Cotai Strip, which is positioned away from the city centre and is key to Macau's efforts to become an all-round tourism destination.

A gleaming Cotai project by US firm Las Vegas Sands was halted late last year with the loss of more than 11,000 jobs, and the firm is still struggling for finance to complete the complex.

Sands already owns two casinos in the city including the world's largest by area, the Venetian, which sits opposite the new City of Dreams, and will be watching closely to see how its new neighbour fares.

The Venetian was the first completed development on Cotai and its mix of high-end dining and world-class conference facilities, alongside hundreds of gaming tables, was seen as a pioneer in Macau's growth.

City of Dreams is also hoping to help the city of 546,000 become a more rounded destination.

Upmarket resorts like the Hard Rock Hotel, stuffed with memorabilia from music legends such as Bob Dylan and Elvis Presley, sit alongside attractions such as "The Bubble," a domed multimedia theatre.

Gabriel Chan, a Macau analyst with Credit Suisse, said if City of Dreams met expectations in the first few months without damaging the Venetian's market share, it will help re-energise the Cotai Strip.

"On the other hand, if City of Dreams does meet expectations by cannibalising its competitors, we believe (Sands) will face the most pressure," he said in a recent research note.

Ho took a swipe at his rival's precarious financial position.

"Unlike some of our competitors who have very stretched balance sheets, we are truly an Asian company so we have always managed our balance sheet very carefully," he told reporters ahead of the opening.

Jonathan Galaviz, an analyst with Las Vegas-based consultancy Globalysis, said the opening provided a positive sign.

"At a time when many are questioning whether Macau is still viable for new development, I think this project launch answers that question," he told AFP.

Macau showed tentative signs of recovery in the first quarter, but gaming revenues were still down 12.8 percent compared with the first quarter of 2008, and high-roller gaming, the lifeblood of the city's growth, continues to struggle.

[kyrio]

Macau is gonna be another Fremont St..

[rffrydr]

Georgie Lam...Nothing Is Obvious

There's no chi in slots--nor numbers.
_________________
Today is the Tomorrow you worried about Yesterday!