Sands China says it has already begun the process of redeploying former VIP gaming space at its Macau properties as it prepares for a market rebound in the post-VIP era.
The issue of premium gaming was raised during parent company Las Vegas Sands’ (LVS) 2Q22 earnings call on Thursday morning (Macau time) following the collapse of the VIP industry. That collapse was prompted by mainland China’s crackdown on cross-border gambling and the arrest of two key junket figures – Suncity Group’s Alvin Chau and Tak Chun Group’s Levo Chan – in late 2021 and early 2022 respectively.
Macau’s new gaming law has also changed the parameters for junkets by putting an end to the existence of junket rooms within Macau’s casinos and to the revenue share agreements that had formed the basis of past junket operations.
Discussing the allocation of the former junket space, Sands China’s Chief Operating Officer Grant Chum said the company had already begun redeploying some space from the rolling segment to the non-rolling segment and would continue to do so in future.
“I think we have been watching as the market has been evolving and also planning for the future,” he said. “A lot of the [VIP] salons – certainly the new salons we’ve developed as part of the Grand Suites at Four Seasons and The Londoner Macao project – they’re really premium gaming salons that could be applicable and used by the different segments, whether that is VIP rolling or premium mass.
“Clearly, Macau overall maybe looking at how each operator redeploys assets but as far as we’re concerned, especially with the new products we’ve developed over the past two years, we feel pretty positive about redeploying a lot of those gaming spaces for the premium mass segment.
“Also over time as we look towards the future [we’ll be focusing on] the premium direct segment and attracting the overseas markets from the rest of Asia into those products. We’re currently going through a planning exercise on the future deployment of those areas but as the market evolves and the market normalizes we’ll be able to get more definition on that.”
LVS Chairman and CEO Robert Goldstein said reallocating the company’s premium gaming spaces would allow the company to pivot towards a more profitable business model once Macau emerges from its current COVID-19 setbacks.
“No-one ever thought additional gaming space in Macau was a bad thing,” Goldstein said.
“As we focus more on the base mass and premium mass, I think it expands our offering to make more money, The junket business was always a margin challenged business so I feel grateful that we have all this new space coming back to us that we can redeploy in what will still be the biggest gaming market in the world … and we’ll have the biggest foot print.
“So as the team rethinks that space, it adds all sorts of premium opportunities for base mass, premium mass and direct premium as well. To me it’s a very valuable transition to a higher focused margin business.”
RelatedPosts
