Gaming in Macau can be traced back to as early as the 16th century, and in 1847 the city introduced the first legal framework for gaming.
By António Ramirez
Partner at G&R Law Firm.
Managing Director of CAP Investment Company
In 1961, Stanley Ho and his partners at STDM brought us Gaming 2.0, an innovative offer at that time in the gaming industry, which encompassed restaurants, comp systems, the junkets model, ferries to Macau, and much more, laying the foundations for modern Macau. We are grateful for everything Mr Ho gave to Macau and for his role in the city’s history.
In 2002, visionary Sheldon Adelson and Sands China brought the Cotai Strip to life and implemented the Integrated Resort model (IR), once again changing the gaming industry with a far-reaching impact well beyond Macau. The IR model is much more than casinos and gaming — it includes shopping malls, MICE and entertainment, all under the same roof to create a must-see destination.
Wynn brought us super-luxury IR. Galaxy became a leader and proved that it could compete with and even surpass the US operators. Melco brought a younger proposal and a distinctive architecture that will be appreciated by generations to come. MGM, with an already recognizable global brand, also earned further accolades for the success of its Chinese-American management approach. SJM changed as well, carrying the legacy of history into a modern company approach. The fantastic efforts of operators, the Macau Government, and the Central Government not only gave us Macau Gaming 3.0, but also allowed us to become leaders in gaming worldwide and paved the way for the city’s unprecedented development as well as remarkable improvements in residents’ standard of living.
Now it is time to decide what Macau’s Gaming 4.0 will look like — unless we would prefer to settle for Gaming 3.1.
4.0 requires a new vision, a unique point of observation, and the involvement of companies and individuals from a range of industries that all have something to contribute to the gaming industry. To cite just one example of similar past successes, it was the addition of the MICE business that allowed the development of a genuine Integrated Resorts.
Where to start?
a) First, consider what China wants and expects from Macau. What role can Macau play in the bigger picture of China?
b) What are Macau’s own future goals? How can the gaming industry help Macau achieve them?
c) What are the expectations of Macau’s citizens? Where do we want to work? What legacy do we want for future generations?
Once we identify the answers to these three topics, we can consider what must be adjusted in the gaming industry and the consequent impact that such adjustments will have on the upcoming public tender.
In the future, Macau will need to compete with other rising gaming jurisdictions in Asia, such as Japan, Korea or the Philippines. Macau will also have to compete with other non-gaming destinations — China, for example, is doing a fantastic job of building must-see destinations. Hainan Island’s Golden Flower project is a case in point in this respect.
We can only achieve 4.0 by involving new players who bring a different vision. We need to move from having companies and management that see Macau’s gaming sector purely from a gaming-centric perspective, and shift toward companies and leadership that can add new business and innovative approaches that aspire beyond the current boundaries of Macau’s gaming industry.
Apart from adding one more concession or the concessionaires’ “dilution,” we can regulate and add many different management companies. This would allow Macau to be less dependent on a small number of companies, solving the issue of the so-called “satellite” city casinos, inviting healthy competition, and facilitating change at a much faster pace.
The management companies can bring a different viewpoint by coming from other markets and diverse backgrounds. Nevertheless, we would continue to walk on the firm ground provided by the larger and more experienced companies that hold the concession agreements, offering a safety net.
Management companies that will add businesses beyond the current IR model will take it to a higher level with the use and development of artificial intelligence and other IT solutions, creating a more robust entertainment offer, bringing in global brands not associated with gaming, developing new platforms leveraging gaming, and much more. To achieve that vision, we need a clear plan. We will need to bring new people and expertise to Macau.
Of course, management companies are not the only solution. In the end, those who bid in the public tender must present a compelling business plan that brings new business in line with the three aforementioned topics and adds new business avenues not contemplated in the current IR model — again positively disrupting the industry to take it to a new level.
Surely the current operators already have teams working on Macau Gaming 4.0.