Frank J. Fahrenkopf, Jr.
In the immediate aftermath of the global economic earthquake, the U.S. commercial casino industry is struggling to regain its footing. Depressed consumer confidence and persistently low spending figures continue to plague the industry and many others like it.
Thankfully, the financial forecasts for many gaming jurisdictions overseas are rather bright. Macau, in particular, has experienced an incredible recovery in recent months, providing the global gaming community with a much-needed shot of enthusiasm during these difficult times.
Indeed, few other cities in Asia experienced the harsh realities of the global economic crisis quite like Macau. From November 2008 through June 2009, the city’s gaming revenues sank and unemployment numbers steadily increased. As financial markets around the world grinded to a halt, casino developments in Macau were delayed or canceled. For example, plans to create a $12-billion Cotai Strip were put on indefinite hold.
But, during the past few months, Macau’s fortunes abruptly changed. Gambling revenues surged to $1.34 billion in August, a record monthly total. That record was shattered only one month later, when revenues reached $1.38 billion in September, a staggering 53 percent jump from last year’s totals. As a result, gaming shares spiked and several casino operators reinvigorated expansion plans.
Unfortunately, conflicting news about visa restrictions has tempered renewed excitement about Macau’s recovery. After loosening visa restrictions in August that, at their tightest, limited some citizens to only one Macau visit every three months, Beijing officials began to waver. In October, the policy was changed again to allow citizens to visit the island once every two months. Though the current policy is more generous than it once was, the government’s fluctuations have some casino investors worried.
Still, Macau appears poised to make a full recovery. Economic analysts predict continued growth through at least 2012. And, Macau certainly is not the only Asian gaming jurisdiction with a positive economic prognosis.
In Singapore, work on two multi-billion dollar integrated casino resorts is nearly complete. The 2,500-room Marina Bay Sands Resort & Casino, as well as Resorts World at Sentosa, will be completed in early 2010. Both establishments are expected to perform extraordinarily well, likely earning Singapore a place alongside Macau in the top echelon of Asian gaming markets.
Other gaming jurisdictions around the world are demonstrating tremendous progress as well. Markets in South America – particularly Chile and Argentina – have escaped the repercussions of the global economic crisis and continue to expand rapidly.
Here in the U.S., however, the picture is quite different. Casino revenues remain sluggish, and key economic indicators suggest that the industry will experience a rather protracted recovery. Americans continue to spend with restraint, and, as a result, nearly all consumer-driven industries are struggling. For example, airline earnings are declining precipitously. According to the International Air Transport Association, 54 airlines reported losses during the second quarter of this year, and combined losses totaled $2 billion.
But, though it faces many obstacles, the U.S. commercial casino industry continues to create jobs, tax revenue and opportunities for local businesses. As communities across the country grapple with crippling budget shortfalls, those benefits are needed now more than ever. And several states are looking to casino gambling as a potential solution to their own budget woes.
The current economic climate – and many other concerns – will be explored at this month’s Global Gaming Expo (G2E) in Las Vegas. Each year, the conference and tradeshow brings together the best and brightest from across the world to share ideas, technology and best practices. The future of gaming, from cutting-edge games to innovative management solutions, is on full display at G2E.
As G2E participants discuss the pressing issues that will influence the future prosperity of gaming, their eyes surely will be fixed on Macau. After all, the U.S. commercial casino industry is wrestling with some of the greatest challenges it has ever faced – Macau, as well as other gaming jurisdictions around the world, offers hope that better days are not far ahead.