News / Asia

Asia Gambling Expansion Not Likely to Offset Macau

FILE - a croupier counts the chips at a baccarat gaming table inside a casino during the opening day of Sheraton Macao Hotel at the Sands Cotai Central in Macau.
FILE - a croupier counts the chips at a baccarat gaming table inside a casino during the opening day of Sheraton Macao Hotel at the Sands Cotai Central in Macau.
A number of countries in Asia are considering relaxing their gambling legislation to cash in on an expanding pool of wealthy gamers from the world's most populous and fastest growing nations. This may pose a possible threat to the world's biggest gambling center, Macau.

According to some, 2014 could be the year Japan legalizes gambling. The country's ruling party has submitted a bill to the parliament.  If it goes through, which many expect to happen, it could turn Japan into the world's second largest gambling market.

But the country is far from the only one in Asia with its eyes on gaming. Plans to liberalize or expand the gambling industry are ongoing throughout the region.

Gambling analyst David Green said the reason is that the Asian market is still largely untapped.

He said that in Asia, home to the world's most populous countries, people are getting old and wealthy at a record speed. “You've got a confluence of factors which are driving the capability of people to spend money, they all have the propensity to do it, they enjoy gambling, it is part of the culture. So there is almost an endless supply of potential gamblers,” Green stated.

South Korea currently allows gambling only in a few sanctioned casinos, of which only one is open to locals. But expansion is on the horizon.

Casino operator Genting Singapore is investing over $2 billion to develop a gambling resort. Legislation has been proposed to allow gaming on cruise ships docking on an island off the southern tip of the country.

In Taiwan gambling is legal only on offshore islands, and requires the consent via referendum of half the local population. So far, one island - Matsu - has approved a plan for gaming resorts, while another - Penghu - has rejected it.

Opponents of gambling highlight the adverse effects of a notoriously crime-ridden industry, and fear the development might pollute the environment and bring in an excessive amount of tourists.

But being just a few hours' flight from China is a significant economic incentive for many governments that look to replicate what happened in Macau.

The former Portuguese colony opened up gambling licensing in 2001 and has since recorded double-digit GDP growth. Last year, its annual gambling revenues were $45 billion, seven times that of Las Vegas.

Green, who heads the Macau-based New Page Consultancy, said despite being the world's gambling Mecca, the city state absorbs only a small fraction of gamblers from mainland China. “In terms of annual visitors it [Macau] is only getting around 30 million visitors, 30 millions is just less than ten percent of the population of the cities close by,” he added.

Macau covers less than 30 kilometers of land and borders with the rich Chinese Southern province of Guangdong. Over the years casino operators have built 35 gambling resorts, and more are under construction.

Authorities in Beijing, who control the island under the “one country, two systems” model, have signaled some uneasiness with Macau's reputation as a gambling only economy.

New regulations are compelling operators to diversify and offer more family-oriented entertainment.

Professor Cathy Hsu studies gaming development at the School of Hotel and Tourism Management at Hong Kong Polytechnic University.

She said that despite the money spent on public relations campaigns to promote the history and culture of Macau, the city's reputation is unlikely to change soon.

“The main profit will still come from the gaming sector. When you look at Las Vegas today, yes they generate a lot of family business. But still, when you look at the bottom line it [revenue] is contributed mainly by gaming, Macau is on the extreme side of that. Destination image is difficult to change,” said Hsu.

Analysts also say it is unlikely that gambling expansion in neighboring countries will have a significant impact on Macau's gaming business.

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