Gaming expert, Ben Lee
Despite casinos investing more in non-gaming sectors this year compared to 2023, the numbers are considered to be declining, according to industry expert Ben Lee.
As Macau navigates its evolving gaming landscape, Lee, managing partner of IGamiX Management & Consulting, has shed light on the current state of non-gaming revenue and the emerging threats from neighboring markets.
At the end of this year’s third quarter, Macau’s gaming revenue reached MOP55.6 billion (approximately USD6.95 billion), with non-gaming revenue improving to 13.8% of total casino income, a notable increase from earlier in the year.
However, Lee said this figure is a decline from the non-gaming revenue peak of 22% in 2021.
“Despite investing more in non-gaming sectors this year compared to 2023, the numbers are declining,” he said during yesterday’s France Macau Chamber of Commerce Breakfast Rendezvous.
The inconsistency in reporting among the six operators complicates matters further, as some report net revenue while others report gross figures.
Despite the 1.5% fall from the previous quarter, there has been a notable increase of 13.9% in gaming revenue year-on-year, according to data from the Gaming Inspection and Coordination Bureau (DICJ).
Lee said that while gaming revenue is expected to rise, non-gaming revenue appears stagnant.
“For some reason, non-gaming seems to be stuck at a level of 5-10%,” he said.
For the expert, this raises questions about whether the market is reaching a structural limit in its ability to grow non-gaming revenue.
“It’s an extremely complex question, and I don’t think anyone has the solution.”
Turning to market share estimates, Lee projected Sands would hold approximately 25% of the market by year-end, with Galaxy leading at 30%.
“Sands is still the leader, followed by Galaxy, MGM, Melco, Wynn and SJM,” he said.
While these figures may fluctuate slightly in the final quarter, they are not expected to change significantly overall annual totals.
The discussion then shifted to potential threats from Japan and Thailand.
Lee was skeptical about Japan’s imminent entry into the gaming market, predicting no casinos will open until at least 2030 due to regulatory hurdles.
“I was wrong about Japan taking 10 years; it has taken 12,” he said.
In contrast, Lee identified Thailand as a significant emerging competitor.
With plans for new gaming legislation expected by May, Thailand is poised to introduce multiple licenses for casinos.
“Thailand is a proverbial 500-pound gorilla in the road,” he said.
The favorable gaming tax structure in Thailand could allow casinos to offer substantial comps and incentives to gamblers.
“The casino can give them out of every dollar you lose another 23% more in comps and freebies,” Lee said.
“If we look at what gaming did to Singapore, they put Singapore on the map. Gaming would basically propel Thailand into a gaming powerhouse in this region, without a doubt,” said Lee.
With a large domestic population of 71 million, Thailand does not rely solely on international visitors for its gaming market. He said international casinos have long recognized Thailand’s potential and established marketing operations there.
The gaming expert also addressed concerns about Macau’s ability to diversify its visitor base.
He noted that while Macau had previously attracted a significant number of international tourists, recent figures indicate a decline in foreign visitors.
“Our diversification is potentially an issue,” he warned, noting the percentage of visitors from outside Greater China has dropped from 7.8% in 2019 to 6.5% this year.
Despite these challenges, Lee remains optimistic about Macau’s future but emphasizes the need for tangible progress on promised developments in the industry.
“We’re now two years into a ten-year concession period,” he said, indicating there has been a lack of visible construction or development work on projects that were initially promised by operators like Sands.
As Macau continues to adapt to an increasingly competitive landscape marked by emerging threats from Japan and Thailand, the expert stakeholders must remain proactive and aware of these challenges.
Lee was hopeful Macau could navigate this critical juncture successfully and maintain its status as a premier gaming destination. Nadia Shaw
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