To win, Galaxy says casinos must woo millennial gamers
As a sustainable return of VIP gamers to Macau casinos remains uncertain, gaming companies are looking to an untapped group of potential gamers – the millennials
Macau’s top gaming mogul Francis Lui Yiu-tung has pinned his long-term hopes on wooing millennial gamblers, as he cautioned that a recent revival of the city’s VIP gambling business is not yet sustainable.
“The millennials are catching up. They are young customers that embrace technology and think differently,” Lui, vice chairman of Galaxy Entertainment Group, one of just six concessionaires to operate casinos in the world’s largest gambling enclave, said in an interview on the sidelines of Global Gaming Expo Asia on Tuesday.
“Those are the things we try to understand more to ensure that Macau will be competitive in the longer term.”
The 61-year-old scion of Hong Kong’s sixth richest man Lui Che-woo has seen his family’s wealth soar a whopping 40 per cent last year, as the former Portuguese colony’s fortunes made a comeback. With Macau’s gaming revenues capping a 26-month losing streak in 2016, Galaxy has savoured a 69 surge in share price over the last 12 months, compared with a 35 per cent gain by rival Sands China for the same period.
There are mounting signs that China’s high rollers are flocking back to the gaming hub on the country’s doorstep, as exemplified by recovering VIP baccarat businesses reported by Wynn Macau, Sands China and peers. Macau’s March gross gaming receipts grew 18 per cent, its fastest rate in eight months, bolstered by a 25 per cent uptick in revenue from high stakes punters.
While acknowledging that the return of VIP gamblers to the Southern Chinese enclave – only half the size of Manhattan – had been “encouraging” and “strong”, Lui said it was too early to tell whether the momentum was sustainable.
Macau’s gambling industry had been hit hard by President Xi Jinping’s crackdown on graft and extravagance that has put the profligate spending habits of tens of thousands of mainland government officials under scrutiny. High rollers who contributed two out of every pataca spent on Macau’s
gambling tables tumbled by half from 2014 to 2016.
“The recovery over the last couple of months might have to do with the currency or liquidity situation in China,” the billionaire magnate who oversees multibillion-dollar Galaxy, Broadway and StarWorld resorts in Macau said. “It probably will take a few more months before we claim that VIP is making a substantial recovery.”
The Chinese central bank has taken a series of moves to inject liquidity in the interbank market in an effort to soothe a credit squeeze heightened by US rate hikes, while Beijing is recently loosening its controls as capital outflow pressures ease.
“Greater liquidity and freer capital flows in China bode well for Macau’s VIP business in the sense that money becomes more easily accessible,” said China Merchant Securities analyst Angela Han. “But given that this segment is very policy-driven, its future well-being can also be precarious.”
While high-rollers playing card games like baccarat have propelled Macau’s rise to the world’s gambling capital and surpassing Las Vegas, Lui said the millennials were whom Macau casinos should tap into in order to stay “ahead of the game.”
“We know that these millennials like gadgets and technology,” he said.
Last year, MGM Resorts in Las Vegas launched a mobile platform that allows gadgets-addicted young customers to place bets on smartphones off casino floors. Lovell Walker, executive director of Interactive Gaming Development at the casino giant, labelled their new product as a “foundation for what we do in the future.”
According to a study by the Institute of Gaming, Hospitality & Tourism at Stockton University, only 44 per cent of people born between 1980 and 2000 indicated they were interested in playing slot machines, compared with 72 per cent of non-millennials who said the same .
Lui said conversations between gaming operators and regulators are in dire need to figure out ways to reach out to this tech-savvy generation.
“It might have to be a different type of game,” he said.