Macau’s Love for Baccarat Makes Diversity a Challenge

Macau casinos have trouble diversifying their games because of gamblers love for baccarat, lower casino revenues and government crackdowns on illicit cash movement.

As seen throughout the World, gaming in Macau has taken quite a blow lately. In order to survive, Macau desperately needs to diversity their casinos. The main challenge in this lies in the game continuously proven the most popular among Macau gamblers. That game is Baccarat. In addition the “VIP” version, which included high stakes gamblers waging on borrowed funds for a high turnaround, brings in the largest revenues.

There are many games offered in Macau casinos. Blackjack maintains a certain level of popularity. Sic bo, called cussec or big-small, is a dice game in which players bet on the results of rolling three dice. None of these games possess the same charisma with gamblers as the fast-paced card game of baccarat. The most popular type is called North American baccarat in which players compete to accumulate cards until they reach nine points. Unfortunately, new government crackdowns on illicit revenue are growing. Macau’s attempt to comply with Chinese gambling laws will slow its revenue.

Most Popular Games in Macau Opposite of Las Vegas

Like in Macau, Las Vegas offers an impressive variety of games. But unlike Macau, slot machines are more of a staple with making up 70% of the gaming revenue. In comparison, VIP baccarat normally produces almost the same percentage for gaming revenue in Macau. In Las Vegas, gamers favor the accessibility and speed of play that slot machines provide over baccarat.

According to figures by the Gaming Inspection and Coordination Bureau, Baccarat made up 91% of revenue Macau Casino revenue while it made up 24% on the Las Vegas Strip. Comparatively, slot machines made up a measly 4% in Macau, while it resulted in 47% of revenue on the Vegas Strip. Blackjack comes in at 0% for Macau while Vegas brings in 13% of revenue. Roulette, craps and other games equal 5% of revenue while they combine to 15%.

• In Macau casinos baccarat is very popular
• In Vegas baccarat isn’t favored, but slots are
• Macau casinos are losing revenue
• Government crackdowns also slow revenue

The casinos in Macau have a big advantage because they are becoming more and more able to build mass market revenue which is near 40% of its total revenue. Casino executives have determined they can push higher wagers out of players by lowering the amount of “lower betting limit” seat and leaving them no choice to take sit at the higher end tables. Mass Market revenue is currently twice as high as VIP play in Macau.

Due to such a love and devotion towards baccarat, Macau is finding diversifying a challenge. Macau casino managers admit they are simply following trends and not trying to create or control them. It’s hard to wean gamers off baccarat and onto a different game. The house advantages for baccarat are lower than most casino games. This means that casinos will take far less money from players over time. In addition, many gamers in Macau prefer the baccarats purity as a game of chance and not strategy.

Macau’s Figures Indicate Lower Revenue

Throughout the last six months of 2014, Macau casinos have seen steady fall in gaming revenue. As of November, revenue was 20% lower than last year. VIP baccarat produced $20.5 billion in revenues for the first three quarters of 2014 whereas last year Macau saw $21.7 billion for the same period the previous year.

President Xi has been campaigning for two years against lavish spending and corruption in China. These actions are warding off the habitual VIP gamblers from taking chances. The fleeing of these high rollers, which makes up about two-thirds of Macau’s gaming market, has caused a loss of about $75 billion in market value last year according to the Bloomberg Intelligence Macau Gaming Market Index.

According to the China-backed policy research institute, the Macau gaming industry has enlarged is income as well as “the social income gap” which could damage “social stability.” Last year Macau had more than eight labor protests with workers demanding better pay and conditions in response to growing inflation and housing prices.

Crackdowns in Macau Helps Decline

In Chinese gambling news it was recently reported by the South China Morning Post that Chinese government will begin to crack down on illegal money which has been flowing through Macau’s casinos. The result was an immediate plunge in the Hong Kong Stock Market the next day by a drop of 0.4%. MGM China Holding Ltd. Dropped 7%, Sands China Ltd and SJM Holdings Ltd. Fell 6.2%, Melco Crown Entertainment Ltd. Fell 3.9% and Galaxy Entertainment Group Ltd. Lost 8.2% at the close of trading.

It was also reported that the Chinese Ministry of Public Security was leading the operation. Macau’s monetary authority has already sent notices of planned government action to Macau banks. In addition, Macau regulators met with the ministry last month in a discussion about suspicious activity related to bank cards and point of sales machines in mainland China.

Although Macau is far more profitable nowadays than Las Vegas, there hasn’t been any government crackdowns making U.S. gambling news. Normally, Chinese have strict rules against taking currency out of the country, but Macau’s junket operators can lend VIP players cash which can be repaid in mainland currency. This has been a particularly attractive feature of VIP baccarat to gamblers because they are able to launder money. Unfortunately these junket operators are now being targeted by the government. They are increasingly taking higher stakes players or “high rollers” abroad to places like South Korea, the Philippines and Vietnam.

The governments limit on the number of gaming tables a casino can has definitely slowed down their progress. This cap on limits is increasingly forcing casino operators to focus more on popular games such as Baccarat. Better to invest with what has proven to be profitable rather than risk the lack of interest gamers may possess by attempting to switch games.