Inside Asian Gaming

INSIDE ASIAN GAMING | February 2011 42 Policy Outlook issue. It eats heavily into operators’ margins and is often perceived to be associated with illegal triad activities. Some industry observers now feel that there is a need to clean up (or even de-market) Macau’s VIP gaming segment through greater regulatory control by following the example of Singapore. More specifically, there needs to be a more cautious selection of its VIP players and the channel members (i.e. junkets) who bring in these whales. Others believe the Macau government may need to deliberately ‘de-market’ its VIP segment in order to force the casino concessionaires to redirect their efforts and resources towards achieving its vision and that of the Chinese central government—making Macau an international leisure and entertainment city that all Macanese and Chinese can be proud of, with a diversified range of resources like history, culture, shopping, entertainment (including mass gaming), food and beverage, MICE, and other sightseeing. In corporate Macau and socialistic China, businesses cannot simply care only about themselves and the profits that they can make. They have social responsibilities and must meet the needs and wants of their Chinese stakeholders. Casino operators in Macau are expected to give up more in order to ensure their own sustainability. There is currently no official figure on the number of VIP versus mass market players coming to Macau. But we are probably looking at a few thousand ‘real’ VIP players (with one report suggesting over 70% of those are from mainland China) generating 72% of gross gaming revenue (mainly baccarat). The number of mass market players is many, many times greater. Although around 25 million visitors entered Macau in 2010, past surveys revealed that approximately 50% of all visitors to Macau claimed never to have gambled at one of the city’s casinos. While a large ‘non-transparent’ VIP gaming segment has tarnished the image of Macau, the escalated development of a bigger mass gaming market can create many social problems. For example, the rate of increase in problem gambling prevalence among the local population since gaming liberalisation is a concern for some local politicians. The 2003 survey revealed that around 4.3% of Macau’s population aged between 15 and 64 years were probable problem and pathological gamblers. Some research suggests that casino dealers display a greater rate of problem gambling than the general population. Internationally, several studies found that a problem gambler can potentially negatively affect from 3 to 14 people (including family members and friends. If that finding can be applied to Macau, problem gambling could potentially affect at least 20% (and easily more) of Macau’s population today. Adding to that, a more recent Macau survey found an increase in the rate of probable problem The failure to control the explosive (and erratic) growth of Macau’s VIP gaming segment spells danger for everyone. It may consequently lead to more rounds of visa and other regulatory controls in the near future. major obstacle hampering the development of a more diverse and sustainable economy. The negative image and numerous issues associated with VIP gaming and operations will inevitably continue to haunt Macau’s international reputation. When Macau liberalised its gaming industry in 2002, most people expected the mass gaming market to expand rapidly and that Macau will become somewhat like Las Vegas. When can we expect mass gaming to overtake VIP gaming? The openness of mass gaming differs significantly from the opaque nature of VIP gaming in Macau. Secrets get locked behind closed doors and lenient regulatory supervision can potentially lead to serious problems. Not only is problem gambling harder to monitor, but gambling-related crimes are also harder to keep an eye on. The heavy reliance on junkets to promote and draw players into gaming rooms is another major Although around 25 million visitors entered Macau in 2010, past surveys revealed that approximately 50% of all visitors to Macau claimed never to have gambled at one of the city’s casinos.