Gambling machines are displayed at the Global Gaming Expo Asia, a three-day fair of gambling innovations at the glitzy Venetian hotel in Macau on May 21, 2013. The largest gaming event in Asia, showcasing the industry’s latest products, services and technologies, is taking place amid a decline in growth rates in the former Portugese colony’s gaming industry as China’s economic boom slows. AFP / Philippe Lopez
MACAU—Casino industry leaders met in the world’s biggest gambling hub of Macau on Tuesday for the Global Gaming Expo Asia, a three-day fair of gambling innovations at the glitzy Venetian Macau hotel.
The largest gaming event in Asia, showcasing the industry’s latest products, services and technologies, opens to the public on Wednesday with machine companies focusing on Asian content.
The gaming sector has boomed in Asia over the past decade, led by the former Portugese colony of Macau, which now generates more than six times the gambling revenue of Las Vegas thanks mainly to high-rolling Chinese VIPs.
Singapore, the Philippines and Vietnam are also staking their claims to regional market share, with several mega-resorts in the pipeline.
Despite increasing competition from the region, industry leaders remain confident in the gaming future of Macau. Its revenues jumped to a record $38 billion in 2012 even as the pace of growth slipped from the previous year amid a slowdown in China’s economic boom.
“You’ve got tremendous growth here,” said Frank Fahrenkopf, president of the American Gaming Association, which organized the event.
“As new facilities open, more and more people will want to come to see the new facilities… it adds to the dynamism and the attractiveness of Macau,” he said, pointing to a record growth in gaming revenues in March and new casinos opening in the city.
“It depends on the ability of different operators to see who can produce the best product that’s going to appeal to the 60 percent of mainland Chinese who come here, and innovation will determine who the winners are,” he said.
The annual fair, which began in 2007, features a record 130 exhibitors this year who are increasingly modifying their products to appeal to an Asian audience.
“This year the machine companies are taking their Asian content to a new level,” Marcus Prater, executive director of the Association of Gaming Equipment Manufacturers, told AFP.
“Manufacturers have shifted their development to the type of game that appeals to mainland Chinese players,” he said, adding that it was based on feedback from gamers.
Hong Kong-based Richard Huang, a gaming analyst at CLSA brokerage, believes growth for casinos will be limited in the coming years due to slower gains in the VIP segment which accounts for two thirds of the total revenue for Macau’s gaming industry.
“VIP gaming revenue can no longer generate such type of rapid growth, partly because of all the shutdown on corruption that’s happened in China,” Huang told AFP.
The recent Chinese leadership change is “one of the key reasons why” VIP markets are not growing as much as they were 12 to 18 months ago, he added.
“We’re not seeing a collapse in terms of VIP gaming revenue growth. (But) definitely it’s putting a cap on the magnitude of growth in that segment,” said Huang.
The VIP segment in Macau has grown by more than 10 percent this year so far.
CLSA brokerage is expecting around US$43.3 billion in revenues from Macau this year. This would represent a growth rate of approximately 14 percent for 2013, the same as last year, which saw a drop from 2011’s growth rate of 42 percent.
Six firms are licensed to operate casinos in Macau, which has boomed since the city liberalized its gaming industry in 2002 and allowed casino giants such as Las Vegas Sands, Wynn Resorts and MGM to set up shop in the city.
Macau, which was handed back to Beijing in 1999, enjoys freedoms not allowed on the mainland. It is the only place in China where casinos are legal.—Aaron Tam