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Casino Mecca Macau and the Challenge of Becoming a Global Tourist Attraction

Casino Mecca Macau and the Challenge of Becoming a Global Tourist Attraction

Gambling Mecca Macau

Macau is known as the “Las Vegas of Asia”, a global casino gaming mecca. Before the pandemic, with its many establishments and tourist attractions, millions of visitors each year came in droves to experience the vibrant nightlife and gambling scene.

Macau is considered an ideal destination for gamblers from around the world to enjoy a wide range of gambling options, including table games, slot machines and virtual sports.

But despite its prime location in Asia, Macau has suffered in recent years due to draconian zero-Covid policies, carried out by the Government until last month.
But there is a twist: Big Six operators will capitalize $15 billion over 10 years, with more than 90 percent spent on non-gaming developments.

Now that these restrictions have lapsed, the Grand Lisboa Casino Resort of the deceased gaming magnate Stanley Ho's SJM Holdings, is becoming not only a landmark again. But also, a symbol of growth and good fortune for the entire Chinese Macau region.
The new challenge is to make Macau a global tourist attraction, at a level even higher than the pre-pandemic situation.

Macau's new renaissance

Initially, things did not appear simple: the lifting of restrictions had brought a high rate of Covid infection among Macau resort staff, and at the same time there were few incoming tourists. High border entry controls had led high rollers to avoid China and put Macau, the only place where gambling is legal in China, in trouble.

Thus, as much as Macau over time gained global prominence, in 2022, primacy as a gambling hub returned to American soil in Las Vegas.

The new requirements for renewal of gaming licenses in Macau

As we anticipated, fortunately the top 6 betting operators are reviving business but beyond that, they are trying to build and grow non-gaming initiatives.
In fact, this is an essential prerequisite for the renewal of their licenses on Jan. 1. In fact, the local government is trying to diversify an economy considered too dependent on gambling.

According to senior management, Beijing is behind this decision. In fact, as David Green - gaming and governance consultant and former adviser to the Macau government on casino - said, “Macau has some breathing room now that the new concession agreements contain some serious commitments for non-gaming investments”.
Indeed, in the 10-year franchise agreement, the six incumbents, SJM Holdings, MGM China, Galaxy Entertainment, Melco Resorts, Sands China and Wynn Macau, have committed to invest a total of $14.9 billion.

In addition, Sands and Galaxy will commit more, spending $3.8 billion and $3.5 billion respectively. In 2022, Macau recorded gross gaming-related revenues of “only” $5.3 billion: this is a 51 percent year-on-year decline, far below the $35 billion recorded in 2019.
In contrast, Las Vegas recorded $7.5 billion in the first 11 months of 2022.

After the renewal of concessions, Big Six casino stocks rose between 2 percent and 36 percent. The confirmation of American owned casino licenses eased a situation complicated by the U.S. China decoupling and worsening relations.

Under the new agreement, more than 90 percent will involve non-gaming developments, such as theme parks, convention venues and expos. For example, SJM said it will improve convention and exhibition facilities, creating new garden-themed venues for small and medium-sized events.

Macau's future prospects

According to analysts, the first half of 2023 is expected to bring with it the makings of a gradual recovery. The bet is to achieve profits from betting in Macau of at least 50 percent of 2019 levels. The situation is complex, and for a full recovery, it should take another two years.
Tourism recovery is also quite slow and players have yet to return to fill in the spaces at the Grand Lisboa and at other casino resorts in Macau.

In short, betting will continue to be a significant driver for industry players, but the new challenge is to make the Chinese city a global tourist destination. Despite doubts about diversification, investors are confident that after the announcement of contract renewals, gambling and Bonuses will be a driver of the economy, along with non-gaming investments.


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