The Macau casino sector is “never returning” to its former focus on VIP table gambling, but the electronic gaming segment “can grow faster than many people think,” said Kevin Kelley (pictured), chief operating officer (COO) Macau for Galaxy Entertainment Group Ltd. His comments were in a keynote speech on Tuesday, the first day of the MGS Entertainment Show, held at the group’s Galaxy International Convention Center (GICC), in Macau.
The executive said he was “confident” about the future of the electronic segment, “because I’ve been witness to growth in the gaming industry in multiple jurisdictions during the last 50 years”.
He added: “In every instance, the industry starts with a heavily weighted table gaming segment. And as the operators develop more entertainment amenities… and more diversified tourism segments, guests are much more comfortable playing slots and electric electronic games as our primary form of gaming entertainment.”
Mr Kelley’s experience includes the Las Vegas, Nevada market, and an executive role at Las Vegas Sands Corp, helping to open the Venetian Macao.
He told MGS show delegates: “I realise that many people in Macau say Macau is a table-centric market, and that slots and electronic gaming will never be as popular as table games in terms of revenue generation compared to table games.
“They are most probably correct. However, I’m very confident that the electronic gaming segment can grow faster than many people think.”
He added: “I’m challenging all the manufacturers here today to embrace the opportunity to continue to support the development of gaming products that will resonate with the customer of the future. And rest assured, if you guys produce those games that work, all of us gaming operators are going to buy them.”
Mr Kelley also noted that success and innovation in electronic gaming categories required collaboration among all interested parties.
He stated: “Like other successful jurisdictions in the gaming industry, gaming operators and manufacturers alike [in Macau] must have a healthy, efficient, and supportive working relationship with the regulators across all the government departments in order to help support one another to ensure the industry’s objectives are achieved.”
Under Macau’s updated regulatory system, the market has a cap of 12,000 gaming machines permitted in the market at any one time.
Non-gaming, changing customer demographics
One of the factors driving this ‘new’ Macau in terms of bringing in fresh customers to the city’s casino resorts, Mr Kelley said, was the growth of non-gaming activities, including meetings, incentives, conferences and exhibitions (MICE), as well as concerts and other entertainment. This was part of the operators’ commitments to the Macau government under the current 10-year gaming concessions that began on January 1, he noted.
Following on from the launch this year of GICC at the Galaxy Macau resort on Cotai, Galaxy Entertainment would next year host “over 50 major concert nights and 250 MICE events,” stated Mr Kelley.
He said Macau’s six operators were “pulling their weight in terms of creating new and compelling events” across all the “critical requirements” of their concessions. As a result, the operators are “starting to see a shift in our market demographics,” said Mr Kelley.
He told the delegates at the MGS trade show and summit, organised by the Macau Gaming Equipment Manufacturers Association: “We have to embrace the reality that the success of our past does not necessarily guarantee the success of our future.
“Our business model has shifted from a VIP-centric operating model to a mass- and premium-mass driven [gambling] model.”
He added: “Before, gaming operators and the government could rely on the VIP junkets to provide upwards of 70 percent of Macau’s GGR [gross gaming revenue] with healthy tax, healthy profits, and sizeable tax revenues.”
He added, referring to recent updates in Macau to the gaming regulatory environment and the approach to China’s national security: “Now with Macau’s new junket law and the security law firmly in place in China, that [VIP gambling] ‘ship’ is never returning to its past port, thus challenging the six gaming operators to compete with one another for their fair share of this new market like never before.”
