MACAU BUSINESS


Macau administration has reiterated that there will not be new land parcels reserved for gaming development, and most gaming resorts here here have been fully developed, apart from the expansion of a few projects, including Phase 2 of Studio City by gaming operator Melco Resorts and Entertainment; the Phase 2 development of Wynn Palace by Wynn Macau Ltd; and Phases 3 and 4 of Galaxy Macau by Galaxy Entertainment Ltd. “The government has requested the future concessionaires


to keep investing in new offerings in Macau, but it depends on how these will play out in the coming years,” the academic adds, referring to the conditions in the recently- launched public tender for 10-year gaming concessions in Macau that will begin in the start of 2023, as the current six gaming licences will expire by the end of this year.


Non-Chinese high rollers


While Macau has a higher gaming taxation rate of 40% than its Asian rivals, the continuous influx of Mainland Chinese high-rollers has kept the city ahead of the others in the past, as GBGC suggests, but this fundamental is changing.A revised criminal law came into force in the mainland in March 2021 that outlaws any party from assisting or organising trips for mainlanders to gamble across the border, including gambling trips to Macau—this showcases Beijing’s commitment to weeding out cross-border gambling and capital flight. AndMacau authorities have observed this change and


tried to reduce the reliance of the local gaming industry on patrons across the border. In the revised Macau gaming law — which came into effect in June — and the recently- launched tender, the administration specifically stressed future gaming concessionaires have to attract more overseas gamblers and tourists to the city with a possible 5-per cent gaming tax cut for those that meet the goal. “Gamblers from Hong Kong, Taiwan, Thailand, Indonesia and other Southeast Asia countries and regions had used to be the main cliente for the Macau gaming industry in the past, when there were not many casinos in Southeast Asia and Macau junkets actively organised trips for them to visit and gamble in Macau,” says Kwok Chi Chung, president of the Macau Association of Gaming and Entertainment Promoters. “Many Southeast Asian jurisdictions now have their own


casinos so it really remains to be seen whether Macau can be competitive and appealing in the eyes of [Southeast Asian] high rollers,” the head of the local junket industry trade body adds. A similar perspective is also echoed by Praveen Choudhary, a gaming analyst at Morgan Stanley. “The competition has been heating,” he told a conference session at G2E Asia in Singapore in late August. “The ASEAN-based VIP customers might be something that everybody will fight for, and we will see when Macau opens up how much [of the VIP business volume] comes back to Macau.” Following the onset of the pandemic over two years ago, Macau has only maintained largely-quarantine free travel arrangements with Mainland China, while individuals from the Association of Southeast Asian Nations (ASEAN) states


“... the advantages the [Macau gaming] industry has enjoyed in the past two decades and more will become less and less given the regional competition, including new jurisdictions liberalising casino gambling,” says local academic Zeng Zhonglu


and elsewhere except the Greater Chinese region were prohibited from visiting Macau for travel purposes. This ban has only been lifted since 1 September for most non-Greater Chinese jurisdictions, but visitors from these places still have to undergo a mandatory quarantine upon arrival.


Manpower exodus


Except for high rollers, manpower — including skilled professionals and seasoned executives — is likely another issue Macau should look into amid this regional race. “The major challenge we face nowadays is staff hiring; the staff shortage is a big issue globally,” Ms Lee of Bloomberg Intelligence remarked. “It’s even more challenging for markets like Singapore and Macau because they are very small in terms of the population. They always have to hire a lot of foreign staff to support the management of the [resort] properties.”


This might be true for Macau prior to the pandemic,


but it’s a different story in post-pandemic times. In light of the gloomy economic fundamentals over the past two years, Macau gaming operators have slashed the size of their non-resident employees to cut costs and ensure local employment as requested by the local authorities. Latest official data show the number of non-resident employees in the gaming and entertainment segment here totalled 9,022 in July 2022, plunging by nearly 43 per cent before the COVID-19 pandemic, while the number of non-local staff in the hotel industry also slumped by 38.1 per cent to 19,467 over the same time period. As it is expected the size of the Macau gaming industry


will likely not be back to the pre-pandemic level over the demise of junket operators and other reasons, local gaming operators might further cut costs in the future, Macau-based gaming commentator Billy Song Wai Kit says. “Operators might keep the headcount unchanged — they will employ newbies with lower salaries and let go of seasoned veterans that enjoy higher salaries,” he illustrates, expecting this situation would happen to both resident and non-resident gaming workers. “Then we will lose these quality [gaming] professionals to other Asian gaming jurisdictions,” the president of the Macau Responsible Gaming Association President says. “In fact, this has already happened.”


OCTOBER 2022 23


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