The World's High Rollers Are Abandoning Macau - Here's Where They're Going
As they retreat from Macau, junket operators are directing their efforts to locations with less restrictions. Countries working to build up their own gambling assets may stand to gain from the offset of Macau's wealthy players.
China President Xi Jinping's crackdown on corruption has left Macau's casinos in a tight spot, putting more pressure on the junket operators that cater to the big gamblers who make Macau the most money.
Junket operator Gold Moon just closed one of its VIP rooms at the Sands Cotai, Macau Business Daily reported on Wednesday, the second junket in less than a week to shut down rooms. On Saturday, David Group, one of Macau's top junkets that runs VIP rooms for major U.S. casinos, announced it would close three of its seven rooms. Analysts told South China Morning Post that another, Neptune Guangdong Group, might be next.
So where does a big junket operator go when they leave the biggest gambling center in the world?
Reuters reported that some junkets are moving operations to neighboring countries such as Vietnam and the Philippines. Frank Ng from David Group told Bloomberg Businessweek that the company plans to move into the Philippines, Vietnam and South Korea. Eventually, Ng said, David Group also plans to do business in Australia and Europe.
REUTERS/Cheryl RaveloA view of slot machines is seen as visitors start walking in during the opening of Solaire Casino-Resort in Pasay city, Metro Manila March 16, 2013. Big casino operators will be scrutinising the Philippines' debut as Asia's newest top-end gambling destination this weekend to see if Manila can deliver on promises of better profit margins and lower costs than global betting capital Macau.
Manila is the Philippines' answer to Macau and Singapore. It opened its first high-end casino, Solaire, in 2013. Following Solaire, Macau's Melco Crown Entertainment opened its own $1.4 billion casino this year, City of Dreams Manila. The two luxurious properties are an attempt to lure in more overseas visitors and there are a couple more property plans already in the works. But so far, interest has been lagging, with gaming revenue for Manila reaching a disappointing $2.2 billion in 2013.
Solaire was built with 500 rooms, 300 game tables, 1,200 slot machines and plans for expansion. The next phase of construction is reported to include 312 new hotel suites, a theater, mall and water feature. The property also includes a ballroom, spa, fitness center, bars, restaurants and entertainment lounges. City of Dreams Manila plans to have six hotel towers and 946 rooms by next year.
According to a 2013 interview with Wall Street Journal's Kate O'Keeffe, only six percent of Manila's tourists come from China. O'Keeffe said while there is some U.S. presence in Manila, U.S. casinos have been reluctant to get involved in any development.
Courtesy from The Grand Ho Tram Strip
Another contender for China's high rollers is Vietnam's Ho Tram Strip, which opened its first international casino resort in July 2013. Originally planned as the MGM Grand Ho Tram before MGM's withdrawal, The Grand is owned by hedge fund manager Philip Falcone of Harbinger Capital.
The Grand has 541 five-star rooms, 90 gaming tables, 500 gaming machines, an 18-hole golf course, spa and room for kids and teens. Another four resorts and one casino are in development on the Ho Tram Strip as well.
Other countries trying to get in on the action include Cambodia, South Korea and even Russia.
But those encroaching on this territory shouldn't get too excited just yet. According to Forbes, although some are seeking alternative gambling centers, many big-time of Macau's gamblers have instead just stopped gambling. Ng from David Group also told Bloomberg Businessweek that the company's only 'hibernating' until conditions improve.
And if they don't, at least there will be plenty of others vying for their attention.
