Bernstein report says mass gambling could help Macau casino industry recover [sports]
Macau's casino industry has been on the decline over the past 18 months, with gambling profits at the top six casinos in Macau falling 40% in the first half. Industry experts predict that the decline will continue into the second quarter.
This is because VIP gamblers in mainland China decided to stop visiting Macau and preferred to visit countries where gambling laws are more friendly, such as Vietnam, Cambodia, South Korea and the Philippines. These VIP gamblers are responsible for generating more than 50% of their gambling revenues, and their absence makes it difficult for Macau's casinos to make consistent profits under the current marketing model.
A recent report by Sanford C. Bernstein LLC found that Macau's casino industry could revive wealth if it started focusing on mass gamblers instead of continuing its existing strategy of focusing on VIP gamblers. Specific strategies are difficult to create, not because of a lack of general game data, but because of a lack of specific data under current reporting requirements.
The Bernstein report said, "There are only two million [USD] millionaire families in China. It is possible that about 6% of Chinese millionaire families (about 120,000 VIP players) lost 20% of their net worth to Macau casinos in 2014. However, the business model is simply unsustainable. With a loss of $200,000 a year in Macau, the 120,000th richest VIP won't be a millionaire for long."
The report says Macau casinos should focus on attracting new customers in the general gambling category and not worry too much about the VIP sector. The Chinese government has also issued similar instructions to Macau's government's order to focus on transforming its image as the world's largest gambling center into a tourist and family-friendly place.
The Bernstein report concluded that current government policies to curb VIP behavior in Macau are likely to continue , and as a result, most VIP gamblers have already left Macau and have no intention of returning any time soon. Casinos would have to change their strategy quickly if they were to start the recovery process, and the best way to start was to target mass gamblers and consider converting them into regular customers.
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This is because VIP gamblers in mainland China decided to stop visiting Macau and preferred to visit countries where gambling laws are more friendly, such as Vietnam, Cambodia, South Korea and the Philippines. These VIP gamblers are responsible for generating more than 50% of their gambling revenues, and their absence makes it difficult for Macau's casinos to make consistent profits under the current marketing model.
A recent report by Sanford C. Bernstein LLC found that Macau's casino industry could revive wealth if it started focusing on mass gamblers instead of continuing its existing strategy of focusing on VIP gamblers. Specific strategies are difficult to create, not because of a lack of general game data, but because of a lack of specific data under current reporting requirements.
The Bernstein report said, "There are only two million [USD] millionaire families in China. It is possible that about 6% of Chinese millionaire families (about 120,000 VIP players) lost 20% of their net worth to Macau casinos in 2014. However, the business model is simply unsustainable. With a loss of $200,000 a year in Macau, the 120,000th richest VIP won't be a millionaire for long."
The report says Macau casinos should focus on attracting new customers in the general gambling category and not worry too much about the VIP sector. The Chinese government has also issued similar instructions to Macau's government's order to focus on transforming its image as the world's largest gambling center into a tourist and family-friendly place.
The Bernstein report concluded that current government policies to curb VIP behavior in Macau are likely to continue , and as a result, most VIP gamblers have already left Macau and have no intention of returning any time soon. Casinos would have to change their strategy quickly if they were to start the recovery process, and the best way to start was to target mass gamblers and consider converting them into regular customers.
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2023-09-16 12:47
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