Ten years ago we saw that Las Vegas was overly reliant on very-high-net-worth gamblers, with its revenues stalling. We believe Macau today looks a lot like Las Vegas then. But there is one big difference. Macau’s unprecedented gambling boom has a built-in expiration date. The 2001 law that ended Macau’s gaming monopoly and the six concessions that were subsequently granted stipulate that the licences are at all times the property of the government, which retains vast powers over the licensees and their gaming-related assets in the special administrative region. The licences held by SJM and MGM China will expire in 2020, while those of Wynn Resorts, Melco Crown Entertainment, Galaxy Entertainment and Sands China all run until 2022. Gaming is the city’s largest employer, yet last year gambling revenue in Macau fell 2.6 per cent Will all six be renewed? Will the government exercise its right to take over ownership of casino assets? Will operators be hit with tax increases or other new fees? Will new bidders be allowed into the market? The implications for the gaming brands are huge. Gaming is the city’s largest employer, yet last year gambling revenue in Macau fell 2.6 per cent to 351.5 billion patacas, according to government data. It was the first decline since Macau began recording such data in 2002. Shares of Macau’s six licensed casino operators fell by an average of 40 per cent last year. In the wake of the mainland’s corruption crackdown, and with increased competition from other cities that have embraced gaming such as Singapore and Manila, Macau’s position as the world’s premier gaming destination is under threat. Last year the total number of visitors to Macau actually increased, but revenues remained stubbornly down. At the same time, casinos in Macau are being required by the central government to pursue “appropriate diversification” and provide more non-gaming amenities. Currently, Macau casinos’ non-gaming revenue ranges between 1 per cent and 10 per cent of the total. It would therefore be wise for Macau gaming companies’ management to take a new look at the market and respond accordingly. Macau has huge potential beyond gaming, and if its operators embrace this idea, a new set of business opportunities will present themselves that will allow it to attract a new set of customers from a wider range of places. The critical moment in the rebirth of the Las Vegas Strip came in 1999, when top- and bottom-line revenue from non-gaming outpaced that from gaming. That crossover occurred because the city took the deliberate step of promoting itself as a tourist destination, primarily through the “What happens in Vegas, stays in Vegas” advertising campaign. Within gaming, mass-market revenue has four times higher margins than VIP play. Outside gaming, as more and more of the diversified resorts being built on the Cotai Strip open for business, the race to maximise total customer spend as well as grow market share will only escalate, and those adopting best-practice targeting strategies now will be well positioned for success later on. In our firm’s work in Vegas over the past 10 years we have found that customer value does not start and end at the casino entrance. Marketing activity there has been designed to not only attract customers to the destination, but to keep them there, capture more of their spend and keep them coming back again and again. Much of Macau’s marketing efforts currently go solely into customer acquisition. By taking an integrated, digitally enabled and considered approach to strategic marketing, operators can capture a greater share of wallet and boost the average spend per customer. Sands China in particular is showing signs of success at increasing non-gaming revenue, which is growing by 20 per cent year on year. Macau and its casinos have been in the limelight for more than five years, boasting revenues seven times that of the Las Vegas Strip at its peak. But the days of easy success are over. Right now may seem like the worst of times for Macau, but if it faces up to its new reality and takes a more measured and strategic approach to growth, the good times may return sooner than most people think. Jay Milliken is a senior partner and David Brabbins an associate partner at Prophet, a strategic branding and marketing consultancy. They are both based in Hong Kong.