Casino gambling, wagering on sports and iGaming activities are prohibited in China. The country has tough laws when it comes to gambling, but an exception is applied to Macau, a popular tourist destination and a special administrative region (SAR) of China.

Although the city offers casino gambling, the crackdown against the activity extended from China with a request for Macau to implement foreigner-only gambling halls. This came in an effort to track their activities and determine what part of the operators’ revenue comes from foreign tourists.

Details regarding the new requirement first emerged a couple of years ago toward the end of 2022. Despite the requirement, separating foreign casino visitors was significantly unpopular and the gambling operators quickly identified this trend along with the need for an effective way to track the activities of foreign visitors.

Bill Hornbuckle, MGM Resorts’ CEO and president, participated in the J.P. Morgan Gaming, Lodging, Restaurant and Leisure Management Access Forum, as announced by IAG. During the event on Friday, the executive spoke about the ineffectiveness of the foreigner-only gambling zones, uncovering details regarding an innovative solution the company used to tackle the issue.

Hornbuckle said that with the implementation of the new requirements for foreigner-only visitors, operators faced a challenge as they had to establish private rooms for gamblers from different jurisdictions. This otherwise separated the visitors and turned out to be a significantly unpopular method.

The Chip in Chip Technology Brings Benefits

Addressing the need to track the gambling activities of foreign gamblers in Macau, MGM Resorts implemented a new “chip in chip” program. The company’s CEO and president spoke about the benefits of this technology, outlining that it allows the venue to track every chip and at the same time reduce gaming errors. According to Hornbuckle, the technology also played an important role in the back-end operations, including financing and accounting.

“We put in a ‘chip in chip’ program several years ago where basically every chip is tracked, and the benefit at the time was no errors to the game, you knew exactly where to put your labor, there were a bunch of back-end benefits as well in terms of accounting and financing, and it was meaningful.“

Bill Hornbuckle, CEO and president at MGM Resorts

Calling the technology a huge advantage, the executive said that tracking the activities of foreign players is easy. At the same time, Hornbuckle said that customers from different jurisdictions are not separated from each other, which contributes to the customer experience. Finally, MGM Resorts’ boss said that the gambling regulator in Macau approves the technology considering its effectiveness.

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Melco Resorts has expanded its Macau properties with three new gaming areas for foreign players. The news comes amid the strong recovery of the gambling industry in the special administrative region.

The company chairman and chief executive officer, Lawrence Ho, spoke about the new areas during the recent opening of an indoor water park at Studio City. In an interview with Inside Asian Gaming, Ho addressed the new areas, saying that they are Melco’s way to keep up with the increasing number of foreign tourists.

The CEO said that now both City of Dreams and Studio City have gaming areas for foreigners. He noted that two of them are in the former property, and another one in the latter, providing extra gaming tables for visitors.

Ho noted that the crowds coming to Macau have been increasing following the lifting of the visitation restrictions. He believes that the region will attract even more visitors in May.

The COVID Woes Affected Melco’s Business

The COVID-19 pandemic and China’s zero-COVID policy devastated Macau for a time. The local gaming and entertainment industry was struggling to cope with the travel restrictions and the sudden lack of visitors.

Amid all this trouble, many of the local operators reported subpar results. Melco, for example, announce a net loss of a whopping $931 million USD in 2022. This was the second devastating year in a row for the company, which lost another $810 million in 2021.

Luckily, Ho believes that Melco’s results will be better this year. While he lamented losing so much money in the past three years, he said that Melco is not expected to lose money in 2023. However, its bank debt has increased substantially, meaning that the company will have to work extra hard to pay its debts.

Ho counts on Melco’s signature facilities and entertainment offering to attract more visitors to Macau. Now that border tourism has been restored, his team hopes that many foreign tourists will come to the special administrative region.

A week ago, Macau reported that its gambling industry continued to rebound in March. The total gross gaming revenue recorded in the region sat at $1.58 billion, representing a substantial year-on-year increase.

Credit Suisse ex attributed the favorable results to the resumed package tours, which continue to bring more and more people to Macau. This extra visitation translated into a daily GGR boost of around $41-46 million in mid-March and $59-62 million in late March.

However, more needs to be done if Macau is to return to its pre-pandemic results.

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Surging economic growth appears to be the theme across many popular Asian gambling destinations, as Macau also recorded a sharp rise in revenue. Its slow recovery after the COVID pandemic allowed other gambling hubs like Korea to flourish, challenging the Chinese territory’s previously undisputed regional monopoly.

The Region Suffered Tremendously during the Pandemic

Korea and Macau’s casino industries closely paralleled each other during the early pandemic, suffering tremendously from the border closings and lack of overseas visitors. Since 17 out of Korea’s 18 casinos only accepted foreigners, travel restrictions nearly destroyed them overnight. Macau fared slightly better, relying on a slow but steady flow of local bettors.

As the world started to recover, the tables began to turn. China’s Zero COVID policy significantly hindered recovery efforts, allowing other gambling destinations across Asia to pick up the slack and attract the influx of foreign bettors seeking to spend their money. Korean casinos happily obliged, fueling the ongoing stellar growth.

Asian Gambling Is on Its Way to a Full Recovery

Paradise Co, South Korea’s premier foreigner-only casino operator, reported triple-digit growth as revenue rose 130% over March 2022 to KRW42.7 billion ($32.5 million). These results continue the positive trend from the start of the year. The first three months of 2023 saw Paradise Co’s revenue soar 152% year-on-year, reaching KRW135.2 billion ($103 million). Table game profits performed even better, growing 252% to KRW1.26 trillion ($960 million).

The positive trend appears to hold across Asia, as Macau also enjoyed a meteoric rise in revenue. March GGR smashed projections soaring nearly 250% above the March 2022 results. Revenue for the first three months of the year hit MOP$34.6 billion ($4.29 billion), representing a 95% year-on-year increase. Packaged tours from China played a substantial role in the recovery, helping the region return to normal business operations.

The Resurgence Offers New Opportunities

Despite the similar resurgence in gaming revenue, South Korea and Macau’s gambling industries have little in common. Korean casinos maintain their focus on attracting foreign visitors and rely heavily on integration with the country’s thriving tourism sector. Meanwhile, over 90% of Macau’s tourists traditionally come from mainland China and Hong Kong, with foreigners viewed as a welcome addition.

While each approach is suited to the country’s strengths, the pandemic showed the value of diversification. Macau is trying to diversify its offerings beyond gambling to become a more family-friendly international destination. However, with other developed markets like Korea offering arguably better tourism experiences, the Chinese territory has to carefully consider where to invest its resources to keep up with the competition.

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