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The Place To Be

The Place To Be

Last month, when I visited Macau for G2E Asia, I had the pleasure of meeting many old friends. From Sands China CEO Ed Tracy, who I’ve known for more than 20 years, to Bob Drake, the CFO of Galaxy Entertainment, who I’ve known for less than five years. Like Tracy, some of the people I know there are old Atlantic City veterans, who I met at the beginning of my own career. And also like Tracy, they’ve always been on the cutting edge of gaming development in the newest gaming jurisdictions.

It’s been said that you can’t claim to be a major casino company without having an interest in Macau, or at least somewhere in Asia. Caesars Entertainment understands this, and the company is making multiple moves to erase that shortcoming. Pinnacle Entertainment bought a piece of the Ho Tram Strip project in Vietnam recently for a relatively modest $95 million. We know Station Casinos and Penn National Gaming are each looking at different countries in Asia.

Some companies, like Galaxy, are making Asia their sole focus. And why not? The waters are deep and full of fish. While in Macau, I stopped in a casino on a busy Tuesday afternoon to reflect on the fact that Macau has not even penetrated 1 percent of the Chinese market! As players took up every seat at the baccarat tables (and sometimes two to three deep behind each seat) and even, remarkably, were jamming most of the available slot machines, it’s mind-boggling to think about what could be in Macau. With revenues increasing at nearly a 50 percent pace every month, the possibilities are amazing.

Still, it kind of felt like a bubble. After all, I have firsthand experience with a similar phenomenon—Atlantic City. When I was a dealer, I witnessed that two-to-three-deep action—albeit at blackjack tables rather than baccarat—and I couldn’t help but draw the comparison. Atlantic City executives thought the well would never dry up. And to be truthful, it took 30 years before the city experienced a revenue decline. But decline it did, and rapidly at that.

Another similarity is the day-trip nature of the Macau visitor. Only 30 percent of visitors spend the night, and just to maintain that level with the increasing number of visitors, Macau will have to add 50,000 rooms over the next five years. Which also brings us to the nature of the gambler—someone who is there to win rather than to simply play and have fun.

And like Atlantic City in the beginning, Macau has labor troubles in filling positions with capable workers. When I was a dealer in the early days of Atlantic City, I would work six days a week, nine or 10 hours a day. It was a brutal existence, one which did not lead to superior customer service—the same problem Macau is experiencing these days.

So maybe that’s why so many former AC executives have landed in Macau. The problems are similar and the solutions should be as well. If they can apply their knowledge and experience, that bubble never has to burst.

One thing Atlantic City never learned until it was too late was the very nature of sustaining the resort as a destination. Macau officials seem to have learned that early on by insisting upon facilities with strong non-gaming amenities. The new Galaxy resort has much of that, and Las Vegas Sands began that trend, one which it has extended in Singapore as well. Now, every new resort will be required to raise the bar, not just because it’s what the government wants, but because it’s what the customers want.

Other areas of Asia need to understand that to be simply a casino isn’t enough. Whether it’s Taiwan, Japan, South Korea or Vietnam, integrated resorts are the way to go. Gaming becomes just an amenity—granted the most important amenity, because no simple resort would be able to afford a billion-dollar-plus cost without the return you get from a casino.

Asia is certainly the place to be—for any gaming company, any gaming executive with a great ambition, or any company that serves the industry. The hopes and opportunities we all saw in gaming are alive and well there. And the chance to be part of the next iteration of casino gaming is irresistible.

Roger Gros is publisher of Global Gaming Business, the industry's leading gaming trade publication, and all its related publications. Prior to joining Global Gaming Business, Gros was president of Inlet Communications, an independent consulting firm. He was vice president of Casino Journal Publishing Group from 1984-2000, and held virtually every editorial title during his tenure. Gros was editor of Casino Journal, the National Gaming Summary and the Atlantic City Insider, and was the founding editor of Casino Player magazine. He was a co-founder of the American Gaming Summit and the Southern Gaming Summit conferences and trade shows. He is the author of the best-selling book, How to Win at Casino Gambling (Carlton Books, 1995), now in its fourth edition. Gros was named "Businessman of the Year" for 1998 by the Greater Atlantic City Chamber of Commerce, and received the Lifetime Achievement Award from the American Gaming Association in 2012.

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