Gaming | The decline of Atlantic City seen as a lesson to Macau

Peter Angelides

The Macau Polytechnic Institute (IPM) organized a gaming forum yesterday that examined the decline of the gaming industry in Atlantic City and its implications for Macau.
Reflecting on the theme “Postcards from the Past, Lessons for Macau,” Michael J. Pollock from Spectrum Gaming Group, related the Atlantic City downturn to the collapse of Lehman Brothers in 2008 that saw  USD8 billion “evaporate” from a private capital planned investment worth about USD10 billion. The focus of his presentation, however, was based on the “universal truth” related to the gaming industry: “Having a regional monopoly is not an effective long-term business model.”
Mr Pollock added that the “formula for success” consists of 4 factors: Effective regulation, effective public planning, free-market forces, and realistic expectations. In his words, “The public sector’s role is in investing the necessary funds, fostering a positive investment climate and building infrastructure related to tourism, transportation, housing and retail.”

Michael J. Pollock

“Gaming should be viewed as part of tourism infrastructure and work in tandem with other attractions to encourage broader visitation, requiring a proper planning to ensure that it can serve as a catalyst for tourism,” the executive concluded.
Focusing mostly on the issues caused by regional competition, Peter Angelides recalled the fact that any gaming city or location is potentially exposed to the possibility of a neighboring region starting to develop a similar industry, highlighting the fact that a “strict regulation at the start can be very useful for the healthy development of the gaming industry”. According to him, “gaming laws and regulations should not become loose and than get enforced when things fail to comply with the goals”, but, instead “start strict and firm and then you start to peel-off from it when necessary in order to keep the market running”.
Referring to tourism and other industries in areas were gaming has a big share of the market, Mr Angelides said, “to achieve stability the government must make sure that everybody [all business sectors] is on the same page.”
An IPM professor from the Gaming Teaching and Research Centre, Zhonglu Zeng, proposed some suggestions to the local market, also based on the example of Atlantic City. “Macau should learn from the Atlantic City example because there are a lot of similarities between the two cities in the way that they are both facing the potential of competition with more casinos being built in nearby cities, regions or countries that will compete against Macau,” he said.
Mr Zhonglu also used the example of Las Vegas to say that, “Macau should build a big enough industrial cluster and also gaming and non-gaming entertainment clusters. According to the industrial clustering theory, the bigger the cluster you have, the more competitive your pace will be, so one bigger cluster will have the ability to strengthen itself.” He concluded that “the thrive of Las Vegas was due to the big industrial clusters it possesses.”
Another of the problems with similarities to Las Vegas detected by the IPM scholar is the fact that currently no surveys on gaming visitors are being done. “We only do general surveys and it is very important to know in-depth what the gaming visitors think, need and expect from Macau,” he said.