Macau, the Casino Capital of the World, Is Cool to Slot Machines
MACAU - Dragons whizzed across slot machines and virtual horses galloped by with Chinese commentary on giant screens.
Slot machine makers are trying almost anything to get a foothold in Asia, hoping to take the wind out of Macau's $15 billion gaming industry. But for a market that seems like a one-way bet, the road is surprisingly tough.
While Macau hopes to attract the masses who will pour hours of cash into slots, casinos are increasingly competing for the high rollers who love baccarat at the real tables.For more insights into the strategies and trends shaping the gambling industry, click through the up coming web site for in-depth analysis and expert commentary.
Machines modified for the Chinese market are giving way.
Casino operators are moving slot machines off the floor in some cases," says Mark Yoseloff, chief executive officer of Shuffle Master, a manufacturer of machines and card shufflers and readers.
I don't know if it's a short-term problem or a long-term problem," he said. If it's just the slot machine business, we're concerned."
Since Macau quit its 40-year gambling monopoly six years ago, a boom in hotel and casino construction has been underway, overtaking Las Vegas in gambling revenue in 2006 and projected to reach $14.6 billion this year.
Slot machines account for only 4.6% of Macau's gambling revenue, compared to about 80% in Las Vegas, suggesting significant room for growth.
In addition, casinos typically retain 2.5 percent of what gamblers spend at the tables, but 8 percent of what is poured into slot machines.
But mainland Chinese gamblers who come to Las Vegas, once a Portuguese enclave, love baccarat, a card game in which the number closest to nine wins. And high rollers, who gamble more than $100,000 in a single visit, still account for three-quarters of casino revenues.
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The move by Crown Macau Casino, owned by Melco PBL Entertainment, to eliminate 350 slot machines to make room for more tables calls into question projections that the number of slot machines in Macau will more than triple to 35,000 in three years It is.
Once derided as an inconvenient location, Crown struck gold last year by signing a deal with A-Max Holdings, which does business with many gambling tour operators.
Within a couple of months, the company's share of Macau's high-end market quadrupled to 25%, and sales nearly tripled between the last quarter of 2007 and the first three months of this year.
Other casinos are embarking on similar deals as tour operators roam the gambling floors in search of new customers.
Matthew Balesti, head of slot operations at Crown Macau, said, "The idea that the tables are where the money is is different here. But that can change with the toss of a coin."
Machine builders hope that the completion of a hotel, casino, stores, and entertainment complex on the Cotai Strip (a planned "neon alley" on reclaimed land where two islands merge) will transform Macau into a Las Vegas-style destination for the masses.
With perhaps a $500 million contract being contested in Macau, machine makers argue that casinos should use slot machines to counter the pressure on table margins and increased competition from tour operators.
New casinos like toponlinekasinon.com slated for countries such as Singapore, Vietnam, India, and Cambodia could also boost sales for slot makers.
Progress in Macau has been hard-won so far: slot revenues were up 74% in the January-March 2008 period, compared to a 60% increase in overall gaming revenues.
There is no doubt that the market is becoming more competitive," said Ken Jolly, general manager of Asia Pacific for Australian machine manufacturer Aristocrat Leisure.
Aristocrat, which sold nearly 2,600 machines to the Venetian Casino at Las Vegas Sands in Macau, has a 55% share of the Macau slots market. Jolly said that share should rise as Melco tries to strike deals with the planned City of Dreams casino and other new hotel-casinos.
Kurt Quartier, head of Asia for International Game Technology, which controls about one-fifth of Macau's slots market, said the labor shortage will help sell more machines.
Some analysts estimate that Macau will need 50,000 croupiers, or one-tenth of its population, in the next couple of years, with an annual income of about $23,000 per person.
All croupiers must be Macanese, and there are only a limited number of them," he said.
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