Make no mistake, Macao continues to dwarf Las Vegas in gaming revenue, $28.9 billion in 2015 to $6.3 billion from the Las Vegas Strip. However, 2015 saw a 34 percent dropoff in Macanese casino revenues. The decline has been much milder this year – 4.5 percent last month, for instance – but the companies which are heavily invested in Macao (Las Vegas Sands, MGM Resorts International, Wynn Resorts) are having to make amends for diminished Macao revenue streams.
Sands, for its part, can backstop its reduced Macao revenues with a growing share of Singapore's gambling haul. There, Marina Bay Sands began by splitting the market 50/50 with Genting's Resorts World Sentosa. But Sheldon Adelson has grown that share to 68 percent and the upswing continues. In Macao, he is broadening his emphasis on retail malls and on amusement-related attractions. When his Parisian casino-hotel opens in September, its signature attraction will be a half-size replica of the Eiffel Tower.
Steve Wynn is talking about "doing more with less" in Macao … and he'll have to. The government, much to the surprise of market analysts, allocated only 100 table games to new Wynn Palace megaresort, which debuts Aug. 22. The measly allotment was probably governmental punishment for Wynn's blast last autumn that Macanese rationing of table games was "the most ludicrous decision that I’ve seen in my 45 years of experience." To partially make up the difference from the inventory he anticipated, Wynn is moving 250 table games from Wynn Macau, his original casino in the enclave.
Wynn is also making more of less in a different way. "We changed the layout of the floor," he told investors. "We put our higher-yield games in more prominent locations. We put destination-type games like craps in secondary locations. We changed the amount of free odds that we gave at dice games from what was commonly referred to as the three-four-five game. And that had to do with the amount of free odds you'd get if you made line bet to double odds."
The tighter-odds policy applies to Wynn's Las Vegas casinos, as well -- he characterized this tilting of the playing felt as getting more money out of his existing customers, instead of pursuing the ones he had lost (and the Macao downturn is estimated to have cost them $150 million, as Chinese high-rollers continue to lie low).
For those who are conversant in the subtleties of odds, Wynn explained his new math as follows: "To give you an example, when someone has a three-four-five crap game, the house advantage is 37 basis points, 38 basis points. When you go to double odds, the house advantage is 58 basis points or 57 basis points. Now, that doesn't sound like a lot. That's a very narrow margin of a house advantage mathematically. However, 20 basis points is a 60 percent or 70 percent increase in the margin of a dice game, so that the outcome in terms of profitability was based upon a rather granular analysis of each game."
He added, "Casino table games in Las Vegas, if you were to do an analysis, would have a profit margin in the teens at best. We were able to take our profit margins in table games up into the 40s, which I think is unique in our industry … this kind of analysis applied to China is also very enlightening and instructive."
Tomorrow: MGM, Japan and South Korea.
