Asia gaming panel: Macau post-junkets, Thailand possibilities, Philippine strength

Asian gaming is fascinatingly diverse, with different players, markets, regulations and benefits. In a special panel with senior gaming analysts Vitaly Umansky and Alidad Tash, alongside senior gaming executive Andy Choy, we look at everything from Macau’s post-junket world, China’s opening up, Thailand’s possibilities, changes to allow locals gaming and the future of VIP.

…

Each segment is summarized, with the time marked to easily jump to each topic:

00:40 – Junkets are not quite dead yet. 2023 contribution to Macau GGR will be only about 10 percent vs 33 percent in 2019 – which will affect the government most.

02:25 – Other Asian gaming jurisdictions could benefit from shutdown of junkets in Macau but China’s opening up is a bigger opportunity.

04:26 – Money will continue to move out of China even after junkets are shut down. Operators are now concerned about getting former junket players back, given junkets’ credit provision function.

06:10 – China has expressed concern about its citizens gambling overseas. But China benefits most if it allows its gamblers to go to Macau rather than elsewhere. As long as Macau operators reach their non-gaming goals, China won’t be too stringent.

08:36 – One of the reasons for the gaming crackdown in China was illegal online play within China. That prompted negative action by the government which partially led to the downfall of junkets.

10:18 – Governments understand that it’s better to provide a safe and legal place to gamble. China wants to keep that economic activity in its borders. China is trying to shape its gaming like the US model.

11:50 – Chinese outbound travel is still at a fairly low level. Macau is an easy gambling destination, other business travellers going to Asian destinations also gamble.

13:16 – Singapore was a beneficiary due to opening up earlier but many who left Hong Kong for Singapore are now returning to Hong Kong. Singapore is strong, longer-term it will see some growth but then will reach a saturation point. The Philippines will overtake Singapore and continue to grow.

14:50 – Singapore is capped out, currently at around $5 billion, with the new hotel rooms it can increase to up to $6.5 billion but then will be capped out again. Singapore is very good for investment as there are no surprises.

15:46 – For most of the Asian markets the issue is capacity constraints, mostly because of hotel rooms. Locals market are generally the primary market, destination visitors require hotel rooms, will reach peak capacity without new hotel rooms. Question for Macau is will the government allow more hotel rooms to be built.

18:15 – Vegas non-gaming revenue is twice the gaming revenue. Vegas has 155,000 hotel rooms, 20 percent of business is MICE.

19:40 – Korea only has one casino where locals can gamble. Had Japan opened on time, Korea would have lost billions there, which could have prompted it to allow local gambling to get the tax revenue.

21:04 – Asia is a mixed bag concerning regulation, some seeking a heavy hand, others partnering with the industry. In the next few years, governments will be more relaxed in allowing locals to gamble.

23:05 – The more regulated you are, yet still able to do business, the better it is. Competition is good and leads to growth.

26:06 – SJM was making more money in a competitive market in Macau after its STDM monopoly was broken. The goal of government shouldn’t be to prop up a monopolist.

27:00 – The perception of Japanese citizens is that IRs will be like the pachinko parlors. MGM is most likely to succeed with an IR if they choose to do so. Only by proving the other benefits will it work in convincing locals – Singapore was a good example to encourage governments to allow gaming,

29:30 – Cultural local opposition is what hinders jurisdictions from adopting gaming.

30:30 – Thailand could implement casinos faster than Japan. If infrastructure and regulation are done right, there will be billions in investment. Scale and type of offering will determine what type of tourism it drives. If something like Marina Bay Sands is built, it will help Bangkok fulfill a pan-Asean business city goal. Both large-scale and smaller-scale models can work – it depends on whether the government can build regulatory infrastructure to achieve these goals.

33:50 – Legislation could be flexible, such as allowing locals in large IRs but preventing them in smaller properties, flexible tax rates could be used. Placing an IR in a large city center, such as Bangkok, would allow it to succeed.

35:30 – Pent-up demand by Chinese punters is not going to fade away, travel is still revamping, things will be bright for the next few years. Gaming’s future in Asia will depend on the number of people entering the middle class, the number of those with disposable income. Asia will succeed because it recognizes that integrated resorts are much more important to the economy than just casinos.

38:30 – High rollers will always be important. Over the next few years, on a relative basis, high rollers are declining in importance. But mass needs capacity – hotels, restaurants, entertainment. Macau is close to critical mass, it’s much more built out than it was.

Audience questions:

41:00 – Will Thailand go the way of Singapore, giving out one or two licenses, or follow the Philippines and give out multiple concessions?

41:30 – Rational to start with one or two, then proceed with more later after problems are worked out. Makes sense to have multiple competitors to spread economic benefits. Would suggest one IR in Bangkok and several smaller operations in other jurisdictions that limit locals.