A look at city casinos
The emergence of a new middle class in China has changed the game for casinos in the city of Macau. Indeed, with ever greater wads of cash in their pockets, middle class visitors arrive in ever greater numbers to rub shoulders with the high rollers at the gambling tables of the only city in China where casinos are legal.
The growth of what those in the industry commonly refer to as ‘the premium mass segment’, will – it is hoped – herald a second boom in Machau, who’s Cotai Strip has already seen a massive influx of high rollers from mainland China.
The dawn of a ‘golden age’
In fact, Lawrence Ho, an executive in the gambling industry, has predicted that ‘a golden age of Machau’ will be ushered in the next two to three years, as the economic strength of the city continues to reach record heights, something Metro Play Casino are hoping will happen to the UK gambling industry.
Melco Crown Entertainment is one such company to have benefitted greatly from the current boom. Co-owned by Mr Ho and Australian billionaire James Packer, the company has seen its net income doubled in the second quarter this year. Which is largely due to the sharp increase in visits from China’s burgeoning middle class.
As one of six licensed gambling operators, Melco is the owner of two resorts in Macau and will open a third $3 billion property in 2015.
Melco and its rivals, which include the US-owned Sands China and Wynn Macau, have traditionally targeted wealthy customers who spend at least 1 million yuan on each bet. As these high rollers continue to tighten their purse strings, casinos have shifted their attention to the middle-class market.
The expected growth is not merely a marketing ploy by the gambling industry. Indeed, these predictions are corroborated by economists, who predict that the mass segment will grow by at least 30 per cent this year.
The newly-minted bourgeoisie will spend as little as a few thousand yuan or as much as one million yuan and actually generate higher margins than the super-rich gamblers and as such provide more stable income streams.
The role of transport
China continues to expand its high-speed rail network, in addition to spending an estimated 38 million yuan on a bridge connecting not only Machau, but also Hong Kong and Zhuhai. Indeed, the trend for growth within the gambling industry looks even more likely to continue as travel time to and from each of these regions will be halved upon completion of the bridge in 2016.
Category: Entertainment
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