Inside Asian Gaming

11 10 achines are making their mark in Macau. Slot machines earned US$53 million in the first quarter of 2006 – almost twice as much as in the whole of 2003. Still, even now they account for only 3.4% of total gaming revenue, compared to close to 55% on the Las Vegas Strip and over 70% in downtown Las Vegas. The number of slot machines in Macau is also growing rapidly from a low base. In 2003, there were a mere 814 machines in the city, but by the first quarter of 2006 the number had grown over five-fold to 4,223.The ratio of Rise of the Machines Macau is pegged to experience greater slot machine growth over the next few years than anywhere else in the world. Slot hall operators first drew Chinese gamblers to machines by offering electronic versions of popular table games. While these electronic table games originally dominated the rapidly growing machine market, Inside Asian Gaming’s José Ho discovers that traditional slots are now taking the lead slot machines to gaming tables in Macau is now 2.6 times, compared to over 20 times on the Las Vegas Strip.All this suggests potential for explosive growth of slots in Macau. David Green, director of PricewaterhouseCoopers’ Macau gaming practice, predicts there will be as many as 13,000 slot machines in Macau by 2008. Why Tables Dominate CLSA’s Aaron Fischer offered one explanation for the greater popularity of tables than slots among Chinese gamblers in his authoritative Macau Mania report.“The style of gaming is different, with a much higher level of player intensity in Macau than in Las Vegas. Gam- ing in Macau is a battle against the house whereas in Las Vegas it is treated more as a source of entertainment. Players in Macau are more likely to be from a lower socio-eco- nomic background but are also prepared to spend more of their disposable income on gaming. These reasons favour table games where the stakes are higher.” Until recently, gamblers in Macau also believed that slots – known in the Cantonese dialect as“hungry tigers”– were rigged by ca- sinos to offer meagre payouts. With increas- ing competition in the slot market following the liberalisation of the gaming industry in 2002, slot machines in Macau are paying out more. Furthermore, as Chinese gamblers become familiar with slots, they are realising that they don’t offer such a bad deal. Although slots have a much higher theo- retical house advantage than table games, in practice,casinos end up keepingmuch less of the money spent on slots than on the tables. At Sands Macau, for example, the average table win percentage as measured as a per- centage of table game drop is 15-16%, while the average slot machine win percentage as measured as a percentage of slot machine handle is 6-7%. Chinese players, keen to get the most bang for their gambling buck, are realising that they can satisfy their gambling desire on slots with a potentially much lower total outlay than at the tables. Another explanation for the dominance of tables games in Macau is that Chinese gamblers supposedly believe they can influ- ence the outcomes by spotting patterns and picking lucky cards or numbers,whereas they leave their destinies to unfeeling and pos- sibly corrupt computers when playing slots. Such attitudes are quickly changing however, in large part due to the efforts of Macau’s slot hall operators to educate Chinese gamblers. Familiarity Breeds Comfort In order to make table-loving Chinese gam- blers more comfortable with machines, slot hall operators in Macau brought in elec- tronic versions of popular tables games such as sic bo, baccarat and roulette. These electronic table games, known as multi-ter- minal games, offer a hybrid between tables and slots, and are a fairly new innovation globally. Macau is the main market where multi-terminal games have really taken off, but while machine revenue in the city was initially dominated by such machines, ac- cording to slot hall operators Mocha Slot and Emperor Palace Casino, traditional slot machines have now taken the lead, with the operators having achieved their objective of using multi-terminal games to drive Chinese gamblers to slots. “Most of our players started with multi- terminals because they are familiar with these games.But slowly they became curious about the slot machines next to the multi- terminals. When they saw more and more people actually winning jackpots,they began to see the point of slots,” says Ted Chan, gen- eral manager of Mocha Slot. Mr. Chan’s “ ulti- mate intention is to move players away from low-denom electronic table games to slot machines,” since he believes slots can have a more lasting appeal than tables games.“Even though you can have the whole collection of table games on machines, the way they are played is always the same. Slots, with their variety of interface, theme and design are far more entertaining.” Mocha Slot is the brainchild of Lawrence Ho, son of Macau gaming tycoon Stanley Ho. The younger Mr. Ho claimed that in the past, Macau’s casinos only included slot machines in order to “look more like a casino.” In order to make slots more appealing, Lawrence Ho set out to establish a string of trendy and cosy slot outlets under his company, Melco International Development. The firstMocha Slot outlet,a 3,000 square foot venue in Macau’s Royal Hotel, opened in late 2003. Recognising the limited appeal of traditional slot machines at the time, Mo- cha Slot introduced multi-terminals, which quickly became a hit, generating roughly 70% of Mocha Slot’s total revenue, accord- ing to Mr. Chan. The multi-terminals drew crowds who gradually began to explore the other idle machines in the outlets, and now multi-terminals contribute only around 40% of total revenue, with traditional slots mak- ing up the rest. Automated Benefits One third of the machines at Emperor Pal- ace Casino’s slot hall are multi-terminals. The casino’s assistant general manager, Patrick Lam, points out that electronic table games can speed up play, and hence raise turnover and contribute to overall player convenience. For example, a traditional Sic Bo game can be held up as croupiers wait for additional bets and pay out winnings, while multi-terminals run at preset intervals and automatically credit winning players. As the casino boom drains the local la- bour pool and the Macau government con- tinues its ban on foreign dealers in order to restrict high-paying casino jobs to locals, the growing popularity of multi-terminals and slots has proved a godsend to casino operators. Mr. Lam says that the Emperor Palace Casino, operated by Stanley Ho’s SJM, is unable to expand because of a lack of dealers. He says that the casino is waiting to hire at least 40 dealers in order to open four more tables – ten dealers are needed to op- erate one table on three shifts. On the other M In order to make table-loving Chinese gamblers more comfortable with machines, slot hall operators in Macau brought in electronic versions of popular tables games such as sic bo, baccarat and roulette Rapid Roulette at Grand Waldo