Macau, already reeling, faces possible total smoking ban

After implementing a partial casino smoking ban in October, Macau is contemplating a total prohibition on smoking in all areas of the region’s gaming market.

Talk about throwing gasoline on a raging inferno.

Macau’s casino industry is challenged, and that’s an understatement.

The market has had eight consecutive monthly gaming revenue declines. A 2.6 percent dip in 2014 was the first annual gaming revenue drop since American-owned casinos began operating in Macau in 2003. Analysts see record-setting futility in February.

So why not add to the misery?

Most agree the move last year to outlaw smoking on Macau’s main casino floors contributed to the gaming revenue declines. Smoking was allowed in private, VIP rooms, and casinos were allowed to build smoking lounges similar to airport-style smoking rooms.

Nevertheless, analysts thought the smoking ban disrupted customer playing patterns.

Deutsche Bank gaming analyst Andrew Zarnett estimated the ban resulted in a single-digit-percentage decline in Macau gaming revenue, but was also “worse than originally expected.”

He told investors the exact effect is “difficult to pinpoint” because of other issues in Macau.

A crackdown on corruption by the Chinese government — focused on junket operators who bring high-end baccarat gamblers to ultraexclusive private gambling rooms — is the biggest cause of the market’s declines.

The past four months of 2014 saw double-digit-percentage decreases, including a 23.2 percent dip in October and a record 30.4 percent decline in December.

The smoking ban’s effect in the declines varies depending on which analyst you speak with. Fantini Gaming Research said the ban could have caused a 10 percent to 15 percent drop.

Macau-based Union Gaming Group managing director Grant Govertsen said his “best guess” is the current ban had a 3 percent effect on mass-market table game revenue, even with “the benefit of having smoking lounges on the mass market floors.”

Those smoking lounges could disappear.

Last month, Macau’s secretary for social and cultural affairs said the legislative council will soon get a proposal to ban all smoking in casinos, including the private high-end gambling rooms. Government officials say the proposal comes without consideration of any related economic effect.

Macau’s Health Bureau released a three-year review that looked at smoking bans in all of the special administrative region’s public areas. The report found that 60 percent of casino employees dislike working in VIP rooms where smoking is allowed while 70 percent of Macau citizens and 80 percent of casino employees support a full casino smoking ban.

“As such, the government is now recommending a total smoking ban, (which) would include the cessation of smoking in VIP rooms, as we had expected,” Govertsen said. “It would also require the removal of the already-operational smoking lounges on the mass market floors.”

The legislation would add penalties for violating the ban and would implement a 70 percent tax increase on sales of tobacco products.

Analysts are unclear when the smoking ban would take place. The bill is expected to be introduced this spring and the Macau Legislature will meet through August.

Zarnett placed 2016 as the target date.

“If realized, we anticipate that this will have an incremental negative effect on gaming revenue,” Zarnett said.

Macau casino operators acquiesced to limits, but a total smoking ban might cause some heartburn. However, Govertsen said casino operators and investors were expecting the news.

“The fact that the government wishes to ban smoking in VIP rooms is well within our expectations,” Govertsen said. “However, we hope that cooler heads would prevail once the bill comes up for debate and that the smoking lounges are allowed to remain.”

Casino operators worry what might happen when players leave the gaming tables for a smoking break. Some might return to gambling, but others might just move on.

“A break in play often means a player has time to reconsider their play situation,” Zarnett said.

Govertsen has already accounted for the smoking ban in his Macau revenue forecasts. This year, Union Gaming expects high-end gaming revenue to decline by 9 percent. But the market could bounce back by up to 10 percent in 2016, because of an economic recovery and the opening of new casinos.

At the end of day, Zarnett said Macau casino customers must accept the smoking ban. After all, Macau is the only legal casino market in China and other Asian gaming jurisdictions are not easily reachable.

He said customer reaction would be similar to smoking bans in U.S. casino markets. Players have learned to deal with the changes.

Howard Stutz’s Inside Gaming column appears Wednesdays and Sundays. He can be reached at hstutz@reviewjournal.com or 702-477-3871. Find on Twitter: @howardstutz.

Business Videos
Circa aiming for December 2020 opening
The 1.25-million-square-foot property will have 44-stories and 777-rooms. It will also have a separate nine-story, 1,201-space parking garage.
Boxabl official explains the building concept
Boxabl business development manager Galiano Tiramani shows off a room built by his company. (Blake Apgar/Las Vegas Review-Journal)
TI/Mirage Tram reopens
The tram that shuttles guests between TI and Mirage reopened this week after being closed for much of 2018.
Las Vegas Convention Center expansion taking shape
Renderings and actual footage show how the Las Vegas Convention Center is evolving.
Former Starbucks CEO Howard Schultz at Las Vegas convention
Former Starbucks CEO and potential presidential candidate Howard Schultz spoke at the Epicor Insights user conference at Mandalay Bay Convention Center Wednesday, April 17, 2019. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Drew Las Vegas to open in the second quarter of 2022
The 67-story Drew Las Vegas is slated to open in the second quarter of 2022 at the north end of the Las Vegas Strip. (Michael Quine/Las Vegas Review-Journal)
NAB Day 1 (Time Lapse)
NAB kicked off at the Las Vegas Convention Center on Monday, April 8, 2019. (Mat Luschek / Review-Journal)
National Association of Broadcasters Show shows 1mm thick 8K TV with 22.2 channel digital sound
Japan’s NHK Science & Technology Research Laboratories booth featured a 1mm thick 8K TV system used in conjunction with a 22.2 channel digital sound system at the National Association of Broadcasters Show at the Las Vegas Convention Center. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Nevada shoppers react to Smith’s no longer accepting Visa credit cards
On March 1, Smith’s announced that it would no longer be accepting Visa credit cards at any of its 142 supermarkets, including the 45 in Nevada.
Massachusetts Gaming Commission asks how long Wynn executives knew about misconduct
Business reporter Rick Velotta gives an update on the adjudicatory hearing on the suitability of Wynn Resorts to retain its gaming license in Massachusetts.
Henderson app developer part of Startup in Residence
Henderson based developers of the app On Point Barricade are taking part in Startup in Residence, a North America program dedicated to pairing tech companies with governments. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Sam's Town employees and customers talk of their love for the iconic casino
Longtime Sam's Town employees and customers love each other and love their casino. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Las Vegas apartments rents
Las Vegas’ apartment market has accelerated in recent years. Developers are packing the suburbs with projects, landlords are on a buying spree, and tenants have filled buildings.
William Boyd talks about the birth of Sam's Town
On the eve of the 40th anniversary of Sam's Town, William Boyd, executive chairman of Boyd Gaming and son of hotel namesake Sam Boyd, talks about how the casino became one of the first local properties in Las Vegas. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
High Roller observation wheel turns five
The world’s tallest observation wheel celebrates it’s fifth year on Sunday, March 31, 2019. (Michael Quine/Las Vegas Review-Journal) @Vegas88s
Escape Room Industry Growing In Las Vegas
Escapology employees discuss the growing escape room industry in the U.S. and Las Vegas. (Bailey Schulz/Las Vegas Review-Journal)
Impact of parking fees on visiting the Las Vegas Strip
There are no data showing a relationship between Strip resort and parking fees and the number of out-of-state visitors to Las Vegas. But there are data showing a relationship between Strip parking fees and the number of local visitors to the the Strip. ‘’As a local, I find myself picking hotels I visit for dinner or entertainment, based on whether they charge for parking or not,”’ said David Perisset, the owner of Exotics Racing. ‘’It is not a matter of money, more of principle.’’ A 2018 survey by the Las Vegas Global Economic Alliance found 36.9 percent of Clark County residents reported avoiding parking at Strip casinos that charge for parking. 29.1 percent reported avoiding using any services from a Strip casino that charges for parking.
MGM's sports betting deals
MGM Resorts International signed a sports betting sponsorship agreement with the NBA in July It was the first professional sports league to have official ties with a legal sports betting house. The deal came just two months after the U.S. Supreme Court overturned a law prohibiting sports betting in most states. In October, MGM became the first gaming company to sign a sports betting partnership with the NHL. In November, MGM became the first gaming company to sign a sports betting partnership with the MLB. Financial terms of Tuesday’s deal and earlier partnerships have not been announced.
Faraday puts Las Vegas land on the market
Nearly two years after Faraday Future bailed on its North Las Vegas auto factory, the company has put its land up for sale. (Michael Quine/Las Vegas Review-Journal)
El Cortez owner Kenny Epstein on running the iconic property
Kenny Epstein, owner of the El Cortez Hotel in downtown Las Vegas, talks about Jackie Gaughan mentorship and answers rumors about bodies in the basement at the mob-era casino. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
LVCVA recommends construction of underground people mover
The Las Vegas Convention and Visitors Authority announced the recommendation for an underground people mover for the convention center. The system would have the potential to expand and connect Downtown and the resort corridor all the way to McCarran. (Michael Quine/ Las Vegas Review-Journal)
LVCVA/Boring Company Press Conference
The Las Vegas Convention and Visitors Authority announced a collaboration with Elon Musk's The Boring Company to develop and operate an autonomous people mover system for the Las Vegas Convention Center District.
International Pizza Expo includes green and gluten free
The International Pizza Expo at Las Vegas Convention Center included companies focused on vegan and gluten free, and plant-based pizza boxes. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
International Pizza Expo kicks off in Las Vegas
The first day of the International Pizza Expo at Las Vegas Convention Center is everything Pizza. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
T-Mobile program aids guests with sensory needs
A program at T-Mobile Arena is designed to provide a more sensory friendly experience for guests.
Photo Booth Expo
Danielle May talks about how Simple Booth transformed her Volkswagen bus into a business.
Nevada Gaming Commission's highest fines
The highest fines assessed by the Nevada Gaming Commission, according to commission Chairman Tony Alamo: 1) Wynn Resorts Ltd., $20 million, 2019 2) CG Technology (then known as Cantor G&W Holdings), $5.5 million, 2014 3) The Mirage, $5 million ($3 million fine, $2 million compensatory payment), 2003 4) Stardust, $3 million, 1985 5) Santa Fe Station, $2.2 million ($1.5 million fine, $700,000 compensatory payment), 2005 6) Las Vegas Sands, $2 million, 2016 7) CG Technology, $1.75 million, 2018 8) CG Technology, $1.5 million (also $25,000 in escrow for underpaid patrons), 2016 9) Caesars Entertainment, $1.5 million, 2015 10) Imperial Palace, $1.5 million, 1989 11) Peppermill Casinos, $1 million, 2014
Tiny Pipe Home vs Shipping Crate
A Tiny pipe home was displayed at the International Builders Show this week in Las Vegas.
Auto repair shortage affects Las Vegas
The auto repair industry is facing a national shortage of workers.
Franchising industry booming
Experts say Las Vegas is a hotbed for the franchise industry.
TOP NEWS
Home Front Page Footer Listing