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in order to determine if this is the norm around the world a junket is ordered and organized and the jet is ready for takeoff to see the world while the customer is left with no more than acustomercomplaint form to light on fire and smoke
junkets are great
Casino Upstarts Give U.S. Operators a Run for Their Money in Asia
Gambling venues are opening across the region to lure Chinese bettors from Macau—home to Las Vegas brands Wynn, Sands
The number of Chinese visitors to the Philippines more than doubled last year from 2015, the year Melco Entertainment Resorts opened its City of Dreams Manila casino, above. PHOTO: SANJIT DAS/BLOOMBERG NEWS
American gambling companies that have won big in Macau in recent years are facing increased competition from casinos popping up across Asia to lure away Chinese high rollers and tourists.
Macau’s gambling revenue was $37 billion in 2018, six times that of the Las Vegas Strip and more than double that of the rest of Asia combined, based on Fitch Ratings estimates. But Macau’s gambling revenue growth fell to its lowest level in three years last month, led by a continued decline in big-spending gamblers.
Macau’s 2018 revenue growth of 13% from a year earlier lagged behind growth of other emerging Asian casino markets, with combined revenue growing 41% last year across Singapore, South Korea, the Philippines and Australia, according to Fitch. Las Vegas grew around 2%. Analysts said the potential for further growth outside Macau in Asia is high.
To tap Chinese demand, some $10 billion of projects are set to open across the region outside Macau from this year through 2021, including in Vietnam and Russia’s Far East, according to data from Union Gaming, an investment bank focused on the gambling industry. A further $22.5 billion is estimated to be spent in Japan by 2025.
That is increasing pressure on big U.S. operators Las Vegas Sands Corp.,Wynn Resorts Ltd. and MGM International, none of which know whether Macau will renew their licenses when they expire in 2022. Wynn and MGM had been absent from Asia-Pacific markets outside Macau; Sands has a casino in Singapore. All have recently sharpened their focus on Japan in hopes of each winning a license to operate there after the country legalized casino gambling last July.
Sands, one of the first foreign operators to win a license in Macau, in 2002, said in its 2018 annual report that its Macau operations were facing competition from elsewhere in the region.
“The proliferation of gaming venues, especially in Southeast Asia, could have a significant and adverse effect on our financial condition, results of operations and cash flows,” the company said. Sands also has a property in Singapore.
Visitors watch a performance at the Parisian Macao casino resort, owned by Las Vegas Sands. Sands was one of the first foreign operators to win a license in Macau, in 2002. PHOTO: PAUL YEUNG/BLOOMBERG NEWS
Wynn, which operates two resorts in Macau, was in talks last month to make a $7.1 billion offer for Australian casino operator Crown Resorts Ltd. but pulled the plug. Australia would have been the Las Vegas company’s second international market, and analysts had seen the bid as an effort to diversify away from Macau.
MGM said that it was committed to long-term growth across Asia and that it saw Japan as an additional opportunity. Sands and Wynn couldn’t be reached for comment.
Macau is the only part of China where gambling is legal. Revenue from big gamblers there has been falling and is forecast to decline again this year, by as much as 10% according to some analysts. While economic uncertainty is keeping some Chinese high rollers at home, industry observers agree that some have been flocking to other Asian destinations instead.
Although there are no official breakdowns of casino visits by Chinese nationals, industry experts typically look to tourism figures in countries that have casinos as a proxy for gambling—and such visits are on the rise. Chinese visitors to the Philippines, for example, more than doubled last year from 2015, the year Melco Entertainment Resorts opened its City of Dreams Manila casino.
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The Himalayan kingdom of Nepal saw Chinese visitors grow to more than 100,000 by 2017 from around 35,000 in 2008. Silver Heritage Group operates two resorts in the South Asian country—including the new Tiger Palace, which helped double its gambling revenue there to $5.2 million in the six months through June 2018 from a year earlier.
Silver Heritage Chief Executive Mike Bolsover said he hopes to increase Chinese visitors to 30% of customers from less than 5%. Mr. Bolsover expects a boost from the opening of an airport near Tiger Palace, located close to the country’s southern border with India, that will have direct flights from Chinese cities including Chengdu, Guangzhou and Kunming.
Japan, which recently legalized casino gambling, could prove the main challenger to Macau.
“It’s going to be a huge opportunity,” said Ayako Nakayama, chief operating officer of Japan’s Integrated Resort Association, which represents gambling tourism interests. A total of three resort-casinos will be permitted in the first five to seven years, she said, but that could later increase to as many as 10.
SHARE YOUR THOUGHTS
Which destinations in Asia outside of Macau would you be willing to travel to to visit casinos and why?
Gambling’s expansion in Asia outside Macau is likely to continue at a brisk pace, said Eric Landheer, executive director at Summit Ascent , a Hong Kong-listed casino operator that has a property in Vladivostok, Russia. However, the market could reach saturation after casinos are developed in Japan, when, he said, supply could start outpacing demand.
Macau operator Melco Resorts & Entertainment has plans to bet big on Asia, with an existing property in the Philippines, and Chief Executive Lawrence Ho has targeted winning a license to operate in Japan.
Challenges remain, though, for Asian markets seeking to steal Macau’s crown. Many emerging destinations struggle with infrastructure issues. From Macau’s ferry terminals and airport, it is roughly a 30-minute trip to a seat at a gambling table. Traffic in countries such as Nepal or Vietnam means the journey can take hours.
In markets like Japan, where infrastructure is less of a concern, designing resorts that appeal to Chinese players without upsetting local sensibilities is a challenge, said Roy Smolarz, managing director at Atalyst Financial Group.
Touring the distressed Lucky Dragon casino in Las Vegas with Japanese investors, Mr. Smolarz said, he was caught off guard by their negativity toward the property’s “China-centric aesthetics,” even though Chinese gamblers were the intended audience.
“People who think they’re just going to set up a fancy resort in Tokyo or any of the other cities, without being extremely sensitive to what is acceptable or desirable by Japanese people, that would be a mistake,” Mr. Smolarz said.
Write to Ese Erheriene at ese.erheriene@wsj.com
Corrections & Amplifications
Macau’s gambling revenue growth fell to its lowest level in three years last month. An earlier version of this article incorrectly stated industry earnings fell to their lowest level in three years. (May 6, 2019)
Macau’s gambling revenue growth fell to its lowest level in three years last month. An earlier version of this article incorrectly stated industry earnings fell to their lowest level in three years. (May 6, 2019)
Appeared in the May 7, 2019, print edition as 'Casino Boom in Asia Pressures Vegas Operators.'
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