GGRAsia – Macau casinos stretch max bets to boost yield

Macau casinos stretch max bets to boost yield

Jun 18, 2014 Newsdesk Features, Latest News, Macau, Top of the deck

Mass floor minimum bets for casino table games in Macau are now commonly in the range of HK$1,000 to HK$5,000 even at non-peak times, three casino executives have separately confirmed to GGRAsia. The corroboration comes following GGRAsia’s observation of mass floors at Macau peninsula casinos both at weekends and on weekdays over a four-week period to June 7.

A few years ago tables with such high minimum bets might have been designated as ‘premium mass’; but not any more. The lowest minimum bet on the ‘mass mass’ floor on the peninsula is now commonly HK$500, even at off-peak hours from our observations. Even then, from GGRAsia’s observations, only a handful of tables are available at that price. The days of HK$300 tables appear to be over – for now.

“It’s unlikely you’ll find any traditional live tables at HK$300 minimum bet in any of the big casinos on the peninsula, at any time of day,” casino executive ‘A’ from a major downtown casino told us, on condition of anonymity as the person is not authorised to comment on the record.

The reason, say all three industry sources, is that the operators are increasingly focused on managing mass-market table yield by player segmentation. The idea is to boost the number of game results per hour, facilitate higher maximum bets via greater flexibility on maximum payouts per table per game and ultimately boost table yield and smooth baccarat hold volatility.

Thinning crowds

The shift in management approach means it is now not unusual to see empty tables on mass floors in downtown casinos even at busy times. A year or 18 months ago it was common to see near-100 percent occupation of tables at some peninsular casinos.

Executive ‘A’ explained: “There are a number of issues when you have most of the tables packed with players. One is that you should always have some tables free for your best players if they want to ‘change their luck’ by moving to a new table. That’s certainly preferable from the management’s side than the player going to another casino. Another is that when tables are really packed, you often get people standing behind the seated players and back betting. The back bettors take their cue for their betting from whoever is perceived to be the ‘main’ player at the table. That slows the game down, and reduces the number of hands per hour.”

Executive ‘B’ from another peninsular casino, also speaking on condition of anonymity, added: “People never bet at the minimum bet. And many players in Macau like to use the progression system, whereby after a losing hand they double their bet and keep doing it until they win. The problem there is that if your table maximums are set conservatively, the dealer will have to keep stopping to calculate whether what’s being wagered is going to exceed the table maximum payout in the event of a winning bet.”

That is particularly an issue for bets on ‘Tie’ where a winning bet pays out at 8:1 – notwithstanding the fact that making such a bet theoretically offers the house a much higher edge. Bets on ‘Player’, or ‘Banker’ offer a blended house edge of 1.3 percent, although ‘Banker’ bets by themselves have a marginally lower house edge than those on ‘Player’.

Executive ‘C’ – talking on the same terms as the first two managers – told GGRAsia: “In Las Vegas, industry practice used to be that bets should be capped at 50 times the table’s minimum bet. Now on some mass floors in Macau it can be as high as 150 times. Volatility in house ‘hold’ rates is always an issue for casinos that offer a lot of baccarat. But those people that really understand baccarat mathematics and are comfortable with the smoothing effects created by the kind of play volumes we have in Macau, understand that it’s better to keep big winners at the table, because the house will win the money back.”

Distant memory

Previously, the focus in Macau had been on raising the majority of mass floor table minimum bets from the HK$100, HK$200 and HK$300 denominations commonly seen until three years ago, to HK$500 or even HK$1,000. That was seen as a way of controlling demand from ever increasing numbers of Chinese tourists in a table-capped market, while at the same time increasing productivity per table in terms of gross gaming revenue generated.

Grant Govertsen, managing partner at Union Gaming Research Macau Ltd, told GGRAsia in response to our observations: “We expect all of Macau’s gaming operators to continue to push table games optimisation strategies, which are likely to result in steadily increasing minimum bet sizes. This is particularly relevant in the context of the market-wide table games cap, which effectively forces operators to yield the greatest efficiencies possible. In the meantime, we would look for Macau’s casino operators to add more ETG [electronic table games] seats in order to retain a level of appeal for lower-end consumers.”