Gamblers will keep pouring into Macau, experts say

New leadership in Beijing likely to try to diversify Macau's revenues, but insiders don't believe it will impact the flow of gambling mainlanders

PUBLISHED : Monday, 03 December, 2012, 12:00am
UPDATED : Monday, 03 December, 2012, 4:26am

Industry insiders are betting that the central government's new leaders will step up efforts to cut Macau's reliance on gambling for income, but that mainlanders will keep pouring in. They also doubt that the weekend release of the former Portuguese enclave's most notorious gangster will roil the outlook.

"The impact [of the latest power transition] on Macau is that I am pretty certain that Beijing will be pushing the diversification," said Su Guojing, chairman of Asian Responsible Gaming Alliance, a Macau-based non-governmental organisation.

"Beijing has always been concerned about the diversification of Macau's revenue," Su added.

Increasing the share of non-gaming business such as theatrical entertainment and shopping has been discussed for many years, but gambling revenue is still by far the leading revenue source.

Grant Govertsen, lead analyst at Macau-based Union Gaming Research, said in a research note issued after the power reshuffle in Beijing that the leadership change is likely to "ultimately" have a positive impact on Macau.

From time to time, Beijing imposes visa restrictions on mainlanders travelling to Macau. But the report noted that "we don't think the new administration or its underlings have any intention of implementing any sort of visa restrictions to impede Macau's progress".

Warwick Bartlett, chief executive of Britain-based Global Betting and Gaming Consultants, said as long as Beijing allows people to come, the Macau gaming industry "has no problem" even during an economic slowdown on the mainland.

According to Macau government statistics, 20.7 million visitors came to Macau in the first 10 months of this year, with more than half of them coming from the mainland.

"There are so many people in China that haven't been to Macau yet. So regardless of the economic circumstances in China the demand to come here is very high. That balances the economic downturn in China," Bartlett said.

The big-spending VIP business in Macau dropped in the second half of this year, but Bartlett forecast that as the leadership gets bedded down, the VIP business will bounce back. "But this is a question of when. I'm not sure when," he said.

Union Gaming Research echoed that opinion: "We should see some sort of uptick in VIP play in the near-term as those customers who had been sitting on the sidelines re-engage in the market."

Over the weekend, former triad boss Wan Kuok-koi, nicknamed Broken Tooth, was released from prison after having served 14 years and seven months for his leading role in the 14K, the largest organised crime outfit in Macau before it was handed back to China by Portugal in 1999.

The industry has been concerned that Wan's return might take Macau back to its dark days of violent street battles between rival gangs prior to the handover.

But Bartlett said such worries are misplaced and he doesn't think Wan will be a problem. "How long has Broken Tooth been in jail? The world has moved on since then," he said, adding: "I think the Chinese authorities will be watching him very carefully."