Lost in some of the commentary about what’s ahead for the gaming industry in 2017 is the ongoing “Las Vegasization” of Macau.
Bo Bernhard, executive director of UNLV’s International Gaming Institute, and one of the world’s leading gaming academics, talked about that recently by phone and email as he looked ahead in the new year. He’s gearing up for another semester of study of the industry that has historically been the foundation of Southern Nevada’s economy.
As he talked about the year ahead — the push for nationwide sports wagering, whether skill-based games and e-gaming are the solution to attracting millennials, what impact the National Hockey League will have on the Strip and the all-important issue of free versus paid parking — he noted how the landscape in Macau is changing and most haven’t paid much attention to that from this side of the world.
By “Las Vegasization,” Bernhard means the growth of nongaming revenue as part of the total resort experience, a phenomenon that picked up steam in Southern Nevada in the late 1990s and has been expanding ever since.
“The government (of Macau) wants diversification and they are getting it, as the industry is now led by people and companies who know how to do this, even in markets where gaming revenues are so dominant it’s tough to make a dent in the traditional percentage-of-revenue metrics,” Bernhard said.
In Las Vegas, it’s pretty evident that the non-gaming revenue growth has moved in spurts, led by Caesars Entertainment Corp., Wynn Resorts Ltd., Las Vegas Sands Corp. and MGM Resorts International. In Southern Nevada, we’ve seen it in the form of entertainment, expanded retail, higher room rates, nightclubs, dayclubs and high-end restaurants. Sometimes the revenue is direct, like nightclub admission costs and bottle fees. Sometimes, it’s a lure to get people in the door with erupting volcanoes and short animatronic shows.
While Macau has seen some of that, it’s only now taking hold and the question will be whether the non-gaming revenue will outpace the casino floor as it has here.
“When you think about it, virtually every consumer product has homogenized with globalization – around the world, we eat at the same fast food chains, we listen to the same pop songs, and we shop at the same major retailers,” Bernhard said. “Why wouldn’t this homogenization also happen with the integrated resort product that made Las Vegas famous? I think we see greater convergence between the Macau experience and the Las Vegas experience, even though both steadfastly retain their original flavors, of course.”
The similarities of Macau to Las Vegas are striking. Wynn has a cable-car transit system that provides bird’s-eye views of a fountain show a la Bellagio; Sands, the king of conventions in Las Vegas, has established that reputation in Macau as well as Singapore and now has a half-scale Eiffel Tower to boot; MGM’s Grande Praca shares many similarities with the conservatories at both Bellagio and National Harbor.
And, the retail scene in Macau is almost overwhelming with hundreds of high-end stores, particularly on the growing Cotai Strip.
That attention to non-gaming as well as gaming components bodes well for companies making a play to gain a foothold in Japan.
“In the end, this would constitute one of the major chapters in gaming expansion – in which the integrated casino resort, which is arguably Nevada’s most successful invention and most lucrative export, is at last exported to one of the world’s largest economies,” Bernhard said.
He added that problem gambling concerns would be part of the equation in Japan and he predicts strong exclusion programs, treatment and education initiatives and possibly an entry fee for locals as they do in Singapore.
Bernhard had some other comments about what’s ahead in Las Vegas.
On NHL hockey’s debut on the Strip later this year: “I don’t think there’s any doubt that the professional team sports vibe will be felt up and down the Strip on game nights, spilling over nicely into the well-designed area surrounding T-Mobile (Arena). I don’t think that the hockey wagering numbers will spike too much on the Strip – and note that sports wagering, more generally, is not a huge driver of Strip revenues – but the vibe, the atmosphere, and, yet again, for the umpteenth time, the broadening of the Las Vegas experience to embrace new ‘rides at the Strip amusement park,’ that’s something to watch in 2017.”
On millennials in casinos: “We have a course in our Center for Gaming Innovation in which our students, largely millennials, invent gambling games — and we’ve got over 30 student inventions in the patent process now. These students walk today’s casino floors and wonder where the fun games are. Now, the obvious observation here is that younger generations have never been huge gamblers when compared with older generations – but we do see significant millennial expenditures in other parts of the facility, such as the nightclub. As such, it could well be that this time is different – and that this time, the younger generation continues to feel an aversion to traditional gambling games, even as they age into cohorts when they traditionally embrace more sedentary activities like casino gambling.”
On Strip parking: “Once these developments take hold and gather momentum, it’s difficult to see them getting rolled back. If I put my five-years-from-now lenses on, it’s just impossible to see more free parking on the Strip.”
Bernhard also is convinced that the Genting Group is coming for sure with Resorts World Las Vegas.
“Whether the project is reconfigured a bit is another matter, but this is a major international operator that wants to get into the Strip and wants to leverage its global database of customers to compete in the most diversified casino playing field on Earth.”
The Review-Journal is owned by the family of Las Vegas Sands Corp. Chairman and CEO Sheldon Adelson.