Non-gaming: the new playground

Gaming and non-gaming have synergetic effects, and the authorities will closely watch and promote the development of non-gaming elements in town, said Paulo Martins Chan, Director of Gaming Inspection and Co-ordination Bureau (DICJ), as reported by local media. Chan said that in regards to how gaming operators are going to develop their non-gaming elements, these should be business decisions and based on the market.
The DICJ head made the comments at the “Responsible Gaming Forum – Non-gaming Elements’ Impact on Macau Economic Development in New Normal”, organized by the Macau Responsible Gaming Association on Saturday.
Chan said that non-gaming elements would help a great deal in attracting mass market clients, stressing that the mass market and VIP market do not conflict with each other, but rather can develop hand in hand. He said the government will supervise and watch out for unhealthy competition or irregular behaviour in the market, but would not intervene too much.
The bureau head added that the government would provide general policy and directions regarding the development of non-gaming elements, and that it would be a factor in considering allocation of new gaming tables, but the gaming operators would have the liberty to choose what non-gaming elements to develop and how to develop them. As long as such projects help the MSAR to become a World Tourism and Leisure Hub, the government would be happy to see it, he added.
Human resource challenges
Koo Leung Chee, Administration Manager for Sociedade de Jogos de Macau, S.A. (SJM), acknowledges the government’s stance as reasonable, but points out that some policies could be made clearer in order to help the gaming operators to develop their non-gaming elements.
“One of the challenges to develop non-gaming elements is human resources,” said Mr. Koo. “Human resources are a problem. No matter the operator’s casino business, tourism, hospitality or food and beverage, they are labour-concentrated industries. Despite the developing technology in the gaming industry substituting some demand in terms of human resources, the hotel and transportation areas still need large quantities of human resources, as in other areas as well.”
“In a place where human resources are very limited, for gaming operators to comply with the region’s or the country’s policy to develop, the government could have provided better guidelines, especially clearer policies,” he says.
Mr. Koo adds that the gaming operators need to consider their own characteristics, and develop their own non-gaming elements accordingly, in order to avoid vicious competition.
Various non-gaming
Davis Fong Ka Chio, Director of the Institute for the Study of Commercial Gaming of Macau, points out that since 2007, developing non-gaming elements has become a trend. He says that, so far, the six gaming operators in town have entered different stages, with some benefitting from an early start and others just now taking off. He adds that non-gaming elements are various: some are for the public to view while others are complementary services.
Fong says that gaming operators have to find their own positioning in terms of developing non-gaming elements so that gaming and non-gaming can work together in order to maximize revenue. He adds that though the gaming operators have been trying, there is still a long way to go to match the society’s demands and to position Macau as a World Tourism and Leisure Hub.
Davis Fong says that non-gaming consumer behaviour differs from market to market. He gives the example of Las Vegas, where the MICE [Meetings, Incentives, Conventions and Exhibitions] and F&B [Food and Beverage] industries have taken higher percentages of non-gaming revenue.
Fong says that Macau is still in an experimental stage and the government shouldn’t intervene too much or it could hurt the creativity of gaming operators, adding that the target for gaming operators to achieve – nine per cent of revenue has to be attributed to non-gaming by 2020 – is a pretty clear goal for the gaming operators.
Regional competition
Davis Fong notes that with the establishment of some new casino-resorts in recent years, and the increase in non-gaming elements, signs of healthy development are showing, such as the backflow of mass market clients. He adds that regional competition is not much of a concern, as the scale of investment made in Macau is yet to be matched anywhere else.
“In previous years, comparing to neighbouring regions, only Macau has the capacity and has made such a big investment – which accumulatively adds up to more than MOP300 billion. I believe in the past 10 years, nowhere in Asia could have matched what Macau could offer in this aspect,” says Mr. Fong.
“However, fighting the competition is like rafting against the current. You either progress or you will be pushed away. Many new projects have established a foothold in Macau, but the other regions have never stopped trying to catch up with Macau. In this dynamic, ever-changing situation, we have to be constantly paying attention,” he adds.
Mr. Fong opines that in order for Macau to develop a healthy and sustainable gaming industry, the gaming operators need to fine-tune their offerings and the city needs to improve its infrastructure. Nevertheless, Fong adds that he thinks there is little chance for other places in Asia to compete with Macau in the coming four to five years.
Table numbers
In regards to the concerns that the government’s control over the increase in the number of gaming tables could affect the recovery of the gaming industry, Fong suggests that more tables don’t necessarily mean more revenue.
The MSAR government has mandated a table cap with a policy to limit the increase in the number of live dealer tables to three per cent compound annual expansion until the end of 2022.
He says that one should also pay attention to the percentage of the gaming tables in use, and whether the development of certain projects has stimulated demand. He observes that some newly opened casinos only have 20 per cent to 30 per cent of gaming tables in use, which means the demand is not enough.
He adds that more tables sometimes mean more maintenance expenses, cautioning to focus more on hotel occupancy rates. Fong notes that with large numbers of hotel rooms, if the occupancy rate is high, it could reflect a healthy mass market.