Smaller Casinos in Macau Thrive as Market Shifts Toward Premium Mass Customers

Smaller operators like MGM China and Wynn Macau are reaping significant benefits in casino market in Macau, while larger rivals Sands China and Galaxy Entertainment scramble to adapt.
Casino market share of Macau
Gambling tourism in Macau is the biggest source of revenue, making up about 50 percent of the economy. Visitors are largely from mainland China and Hong Kong, according to media reports.

Macau, the world’s largest gambling hub is seeing a resurgence driven by affluent premium mass customers, who place bets ranging from hundreds to a few thousand dollars at high-limit baccarat tables, Reuters news report said.

This change comes as the high roller VIP segment, once the cornerstone of Macau’s revenue, has dwindled due to stringent regulations. Meanwhile, the mass-market segment with minimum bets around $60 has yet to return to its pre-2019 levels.

Macau remains the only legal gambling location in China and is projecting a remarkable 14 percent GDP growth this year, standing out as the rest of the country faces economic slowdowns and weak consumption.

“Macau is doing well, but not all operators are benefiting equally from the recovery,” noted DS Kim, an analyst at JPMorgan in Hong Kong. He highlighted that Sands and Galaxy, heavily invested in the lower mass market, have seen their shares fall by 16.7 percent and 11.2 percent respectively this year. In contrast, MGM China and Wynn Macau have surged by 46 percent and 15.7 percent.

Jennifer Song, an analyst at Morningstar in Shenzhen, pointed out that MGM China and Wynn Macau’s smaller size and focus on premium mass customers have led to better operating efficiency, including marketing and sales to these high-value clients.

Macau’s visitor numbers have reached 75 percent of 2019 levels, with gambling revenues expected to hit 80 percent of pre-COVID figures this year. MGM China has seen its gross gaming revenue share climb from 9.5 percent in 2019 to over 17 percent this year, aided by a government reallocation of gaming tables in January 2023 and new additions to its properties.

Wynn Macau continues to enhance its offerings, with CEO Craig Billings emphasizing their strong revenue performance per hotel room. Conversely, Sands China and Galaxy are working to catch up. Galaxy plans to open the high-end Capella Hotel next year to attract premium mass customers, while Sands China is refurbishing its facilities to capture returning visitors.

Non-gaming spending in Macau also rose by 11 percent in 2023 compared to 2019, reflecting efforts to diversify beyond gambling. Authorities are encouraging casinos to expand into attractions like shows, shopping, and museums to appeal to a broader audience.

A potential economic slowdown in China remains a concern, prompting casinos to bolster their non-gaming amenities. This diversification could enhance foot traffic and mitigate the impact of any downturns in gambling revenue.

Chinese authorities are supporting Macau’s appeal, with high-level endorsements and expanded travel schemes for mainland visitors. Efforts to attract international visitors are also paying off, with South Korean tourists becoming the largest source of arrivals outside greater China, and a non-Chinese patron topping spending charts for the first time in early May.

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