Macau’s first VIP slots room is proving a dud less than one month after it opened.
Macau’s SJM Holdings-licensed Jimei Casino welcomed the special administrative region’s first ever junket-run VIP slots room last month but – in the immortal words of Spinal Tap manager Ian Faith – its appeal is already becoming more selective.
On a recent visit, a Bloomberg Business reporter found that the slots room had taken all of one week to scrap its original membership fee of HKD 100k (US $12,850). Despite this lowered hurdle – and pitchmen announcing that the machines allow HKD 1 spins – the room’s operator Zhang Zheng was the only one observed actually playing the machines.
Unlike North American casinos, slots have always been something of an afterthought in Macau. Slots earned total revenue of MOP 11.75b ($1.47b) in Macau last year, down from MOP 14.4b in 2014, while VIP and mass market baccarat accounted for a combined MOP 204b.
Putting a positive spin on Macau’s much-publicized woes, Zhang noted that traditional VIP baccarat rooms “can barely make a profit these days” and thus he was confident his slots room would do all right “because it faces less competition.” Zhang insisted that Macau’s slots have “die-hard fans” and he hoped his room would attract some big spenders during the upcoming Lunar New Year festivities.
Seasonal events like the Lunar New Year and Golden Week celebrations are becoming more important for Macau operators’ bottom lines as the emphasis shifts from VIP to mass. Bank of America Merrill Lynch analyst Billy Ng noted that VIPs have a lot more free time on their hands and can visit Macau on a whim, while most mass market gamblers must wait for holiday periods to plan their trips.
Mass market gamblers were always a more profitable segment than the VIP business, as the latter group requires casinos to lay on the perks and share proceeds with junket operators. However, CLSA analyst Aaron Fischer estimated it takes five mass market gamblers to generate the revenue of one VIP, so this Lunar New Year better bring a bumper crop of the great unwashed.
