Local gaming revenue growth sustained by some 400,000 regular VIP and Premium players

In 2018 the Macau gaming sector generated around MOP302.8 billion (US$37.4 billion), a 14 percent year-on-year rise.

According to Bernstein while GGR growth from late 2016 to mid-2018 was boosted by a strong VIP growth trend, the gaming industry’s value driver is the secular growth of Mass and Premium Mass.

Premium mass refers to players betting high amounts in cash, rather than through junket or house-issued credit used by Macau’s VIP segment. “It is clear that premium consumers remain critical for long-term Macau growth, as wealthier customers spend more and come more frequently — and the population of this demographic is increasing,” Bernstein noted.

Future growth opportunities for the premium customer base were said to be likely focused in a relatively tight geographic scope, covering Guangdong, Shandong, Jiangsu, Zhejiang, Shanghai, Hunan and Henan.

Concerning the future use of technology in the industry, Bernstien considered that the controversial use of AI and facial recognition in the gaming industry is still in ‘its early years’.

The brokerage noted that AI/Facial recognition technology has been deployed at some casinos for security purposes with approval from the Gaming Inspection and Co-ordination Bureau (DICJ) as in Macau. Current regulation only allows the technology to be used for security purposes.

“The technology, however, could be used to identify and track players with different risk profiles, thereby assisting casino operators with marketing efforts and keeping out at-risk players (i.e. problem gamblers), subject to privacy protection laws in Macau,” the report stated.

Meanwhile, the use of Big Data by gaming operators still has room for further development, with companies previously using it to sign up players for customer loyalty reward programs.

“In Macau, as casino operators are now more focused on developing their own premium mass and direct VIP players, casino marketing is increasingly using data analytics to spot these potential players, to tailor reward programs and incentives to attract these players, and to calculate optimal reinvestment ratios,” the brokerage said in the report.

“The use of data analytics is also more prevalent on the operational side of the business to optimize performance and streamline costs.”