Macau’s operators can expect it to take around six months for the basic functions of newly installed RFID smart table technology to be fully optimized but should expect full return on investment within a year, according to a new report by investment bank Morgan Stanley.
The use of RFID tables to monitor play has been rapidly gaining traction in recent months with multiple concessionaires confirming during recent analyst calls that they are either in the process of, or planning to, install smart table technology in the coming months. Such utilization has reportedly been accelerated as a result of certain tax breaks dangled by the government on gaming revenues earned through players from outside Greater China, with RFID seen as an accurate means of measuring such activity.
Only MGM, which installed smart table technology as far back as 2018, is currently using RFID to track chip movements.
In a note following a recent visit to Macau, Morgan Stanley analysts Praveen Choudhary and Gareth Leung said the hype over smart table technology is real with RFID aiding game integrity, providing for a faster game and higher win rate, assisting in the identification of foreign customers and providing increased variety of games and more data to analyze.
However, they noted that it will take some time for MGM’s competitors to fully optimize their systems once installed, suggesting MGM’s edge could remain at least until end-2024.
“According to our industry sources, after installation of RFID/Smart tables, it takes ~6 months for the basic functions to be fully utilized/optimized … it may take longer depending on how the operators use this technology,” Morgan Stanley wrote. “We learnt that casinos get their money back within 12 months on the hardware investment.”
Noting that the “RFID hype train is on,” Choudhary and Leung added, “Most of the Macau concessionaires have ordered smart tables and should be getting them installed over the next 12 months. MGM China was the early adopter in this – it started using this technology in 2018 – but [wider use has been] encouraged by the government and there are some proven benefits as well.”
According to Morgan Stanley, MGM China’s mass table win rate has improved by 500bps since 2018 based on 4Q23 numbers, which is likely in part due to the technology.
“Other benefits of RFID/Smart Tables tech include lower staff costs (fewer pit managers/supervisors needed) and data availability of unrated gamblers,” the investment bank said.
“More importantly, they can accurately identify foreigner gamblers, which get a 5% tax rebate and are encouraged by the government. Investment in RFID/Smart Tables tech could potentially be counted in committed investment.”
Melco Resorts, Galaxy Entertainment Group and SJM Resorts have all confirmed in recent weeks that they are in the process of putting RFID technology into use on their casino floors.
RelatedPosts
