Slot Machines: The Next Growth Area?

Splendid…impressive…fabulous. The Cotai Strip offers the most enthralling and unforgettable experiences. Nothing can get your heart pounding and pulse racing as some of Macau’s grand casinos. The former Portuguese colony is expected to record double-digit growth in gaming revenues this year, exceeding US$10 billion, according to Lau Pun Lap, member of the Legislative Assembly of the Macao Special Administrative Region (SAR).

Last year, Macau overtook Las Vegas as the world’s most lucrative gambling market. On the face of it, Macau’s gaming industry seems similar to that of Las Vegas. But there is an inherent difference. While almost 60% of the total revenues are generated from slot machines in Las Vegas, the figure is less than 5% for Macau. This trend is of particular interest to investors like Macau’s gaming tycoon Stanley Ho, who spends millions of dollars building and redesigning casinos. Also impacted by this trend are the many slot machine makers.

Why do Macau gamblers not have the same soft spot for slot machines as seen in Las Vegas? One explanation could lie in the cultures of the 2 societies. The largest percentage of tourists to Macau is from Asia, a region that promotes community feeling. Hence, community games like baccarat (a card game played on real tables) are a rage here. There is also a perception that slot machines are tampered with to prevent gamblers from winning large sums of money. Moreover, themes popular in the US may not be appealing enough for Asian gamers.

In response to this trend, some casino operators have replaced slot machines with tables for games like baccarat and roulette. This is despite the fact that slot machines are more profitable for casino operators than games played at tables, in the face of surging labor costs.

Slot machine makers have not given up. Machines are being designed to appeal to Asian tourists, with images of dragons and instructions in Chinese. Moreover, slot machine makers have introduced electronic versions of popular table games as well as games liked to celebrities like Bruce Lee and Jackie Chan.

Through technology and innovation, slot machine makers are trying to grab a larger share of Macao’s $15 billion gaming industry. All said and done, Macau’s casino industry continues to boom and slot machine revenues are growing steadily. Macau still represents the most attractive expansion opportunity for slot machine makers.