To turn the Macau Special Administrative Region (Macau SAR) into the “Las Vegas of the East,” three American companies, MGM Resorts International (MGM), Wynn Resorts Ltd. (Wynn), and Las Vegas Sands Corp. (Sands), are investing more in their overseas casinos. These companies are opening new hotels, restaurants, and attractions to bring more international tourists.
The latest museum in Macau SAR houses an impressive collection of over 200 artifacts that trace the historical trade routes of the maritime Silk Road. Despite displaying 30 first-class cultural relics, a visit to the museum is completely free. The inaugural exhibition’s highlights include bronze zodiac heads from Beijing’s Old Summer Palace and masterfully handcrafted dougong, wooden support brackets for traditional architecture. While the artwork is ancient, the curators spared no expense on the latest OLED screens for interactive displays, producing an engaging learning experience.
All of this can be found in the state-of-the-art Poly MGM Museum, which has a self-proclaimed goal of creating “a coveted global art landmark and a forefront in celebrating China’s revered cultural heritage.” With such a lofty mission statement, you would think the founders of this museum would be a historical association or non-profit organization. However, there is an unlikely creator behind this attraction: MGM, an American casino company.
While this may seem like an unusual business venture, this move is indicative of a broader strategy among three American casino companies: MGM, Wynn, and Sands. These companies are facing a series of economic and political problems that endanger the future of gaming in Macau SAR. Their solution is to turn Macau SAR into the “Las Vegas of the East” by diversifying non-gambling attractions.
Unsustainability of Casinos in Macau SAR
Although Macau SAR is the world’s largest gaming market, tripling Las Vegas’s gross gaming revenues, there are still concerns that this industry is unsustainable. First, Macau SAR is heavily dependent on gaming, often at the expense of other industries. For context, Las Vegas’ casinos generate 70% non-gaming and 30% gaming revenue but casinos in Macau SAR generate 95% gaming revenue. This is because Macau SAR lacks the same portfolio of shows, restaurants, and non-gambling attractions that Las Vegas has. As a result, gamblers in Macau SAR tend to spend their money solely on gaming.
Second, the casino industry is heavily dependent on tourists from mainland China. This is partly because Macau SAR is the only place in China that allows gambling. This places the industry in a tenuous position since recent research by Macao Polytechnic University has found that 51.2% of respondents stopped gambling during the COVID-19 pandemic, reducing the consumer base. If this trend continues, the future of owning a successful casino may be uncertain.
Third, the casino industry is vulnerable to policy decisions made in mainland China, which seek to reduce the number of Chinese gamblers. For citizens of mainland China, the Chinese government has limited annual visits to Macau SAR to six. Moreover, the government has imposed currency restrictions, limiting tourists to only bringing up to $50,000 off the mainland annually.
Given these three problems, it is not surprising that André Cheong Weng-chon, Secretary for Administration and Justice, told Macao News that, “It’s not healthy to depend on a single industry, we need to diversify and broaden our appeal to international markets.” After all, gambling represented 60% of government revenues in 2023. Consequently, the problems facing the gaming industry are not just relevant to private businesses but to the government as well.
How Macau SAR Become Dependent on Gambling
While Macau SAR has a long history of formal and informal gambling, it was not always the main “export.” In 1961, when Macau SAR was still a Portuguese colony, Macao Governor Jaime Silvério Marques designated Macao as a low-tax region and a permanent gaming region. That is when businessman Stanley Ho was awarded the right to operate casinos, creating a casino monopoly.
However, Portugal handed back Portuguese Macau to China in 1999, forming what is now called Macau SAR. Under new political control, the monopoly was replaced by a system of multiple concessions. In practice, several companies could bid for and maintain the right to operate casinos. The first round of bidding happened in 2002, and Sands and Wynn joined the market. Over the years, the casino industry bloomed, and Sands China Ltd., a Sands subsidiary in Macau SAR, became the leading casino operator.
In 2022, new concessions were given to six companies: MGM, Wynn, and Sands, and local companies Galaxy Entertainment Group, SJM Holdings Ltd., and Melco Resorts & Entertainment Ltd. Each concession gives operation rights for ten years and outlines the companies’ responsibilities. Under the new concessions, all companies must take steps to develop non-gaming activities and invest in revitalizing Macanese architecture and cultural heritage in old districts. Two years since the start of the concessions, the three American companies have pursued diverse strategies to achieve these goals.
MGM: International Outreach
In an ambitious move, MGM is actively seeking new tourists outside of Macau SAR. MGM’s first attempt was an overseas promotional campaign in Bangkok, Thailand from June 13 to June 29, 2024. The campaign included various events such as a VIP dinner to promote MGM properties, a travel trade luncheon, and smaller side events. Yet, Thailand is not the only country receiving new attention.
On October 14, 2024, MGM hosted a five-day trip for Japanese trade representatives to promote tourism exchange. The itinerary included visits to the MGM Macau and MGM Cotai hotels, A-Ma Temple, and the Ruins of St. Paul’s. Japan has many cultural taboos surrounding gambling, so this trip hopes to highlight Macau's diverse tourism potential. This outreach, combined with the opening of new attractions like the Poly MGM Museum, has led to some early success. In this year's Q3 report, MGM earned $929 million in net profit, which is up 14% from the last quarter.
Wynn: Hotel Renovations
Meanwhile, Wynn, another American competitor to MGM, has looked inward for their solution. Wynn has focused its efforts on renovating food and beverage venues at hotels like Wynn Palace. For example, Wynn recently opened the Drunken Fish, a new seafood restaurant and bar themed around Moutai, a famous liquor from Ganzhou, China. Moreover, Wynn plans to renovate its gambling halls by installing new “smart tables” that use technology to increase game security. Unfortunately, it is unclear if this strategy is enough to diversify spending because research from Deutsche Bank found that Q3 non-gaming revenue fell by 8% since last year.
Sands: High-End Partnerships
Lastly, Sands has focused on securing prestigious partnerships with other American companies. On September 26, Sands unveiled the recently remodeled Londoner Grand Casino, but the company went beyond a simple reopening. Thanks to a partnership with Marriot International, the new Londer Grand Hotel has become a Marriot Luxury Collection Hotel, enticing Marriot’s loyalty program members to book rooms. While it is too early to determine the full benefits of this strategy, MGM saw an increase in room reservations and spending when it partnered with Marriot in Spring 2024.
Moreover, Sands is partnering with the National Basketball Association to host pre-season games at The Venetian Arena starting in 2025. For example, Brooklyn Nets and the Phoenix Suns will play two games in Macau SAR. This is sure to promote more tourism and increase Sand’s performance metrics, which already reached gross gaming revenue of $1.68 million.
Although all three companies are still in the early phases of implementing their strategies, they all have taken large steps to combat the problems facing the casino industry. If successful, these companies can attract more tourists, diversify available attractions, and even promote American entertainment abroad.
Daniel Salgado-Alvarez is a Fall 2024 Young Professional at the East-West Center. He is a recent graduate from Harvard University, where he studied sociology and East Asian studies.