Southeast Asia, Not Macau, to Drive Growth in Regional Gaming Business

Muhammad Cohen, the Editor-in-Chief of iGaming Business Asia, has no doubt that Southeast Asia will be the catalyst for growth in the Asian gaming business in the foreseeable future.

According to the expert, countries in ASEAN are increasingly gaining advantageous positions in the international gambling scene each year. This is attributed to their growing economies, world-class gaming resorts, and the enthusiasm of local players, even if, as in the case of Macau, they live in different jurisdictions. However, Macau is not planning to relinquish its status as a casino leader and is aiming to return to its pre-pandemic GDP level.

Economic Indicators of Southeast Asia

The ASEAN Association comprises 10 countries: Indonesia, Malaysia, Singapore, Thailand, the Philippines, Brunei, Vietnam, Laos, Myanmar, and Cambodia.

The total population of these countries exceeds 660 million people.

Currently, the combined GDP of the ASEAN states exceeds $3.3 trillion USD (2.7 trillion GBP / 3.1 trillion EUR).

Such a GDP figure places the ASEAN bloc fifth in the world, exceeding the GDP of Canada or Brazil by 50%.

Macau's Attempts at Diversification

The "Big Six" casino concessionaires – Sands, MGM, Galaxy, Wynn, Melco, SJM – are closely collaborating with various Macau government departments, including the Macau Government Tourism Office (MGTO) and the Macau Trade and Investment Promotion Institute (IPIM). Efforts are focused on supporting government initiatives to attract a larger number of foreign tourists to Macau.

Sporting events, such as last month's SJM Open golf tournament and the MGM Macau Tennis Masters in December, are intended to draw international attention and, consequently, a tourist audience.

It is expected that the number of foreign visitors will exceed the historical level by 8%. In this case, comprehensive market planning, development, and implementation of various projects will be necessary to meet the needs of visitors from Southeast Asia.

However, not everyone believes that these efforts will pay off. Daniel Cheng, the former Vice President of Business Development for Resorts World and Hard Rock hotels in Asia, notes that Macau is currently targeting a different demographic group compared to ASEAN real estate properties. The new Macau, post-2022, will still largely depend on centralized control of the tourist flow from the mainland. Cheng believes that the enclave lacks the necessary equipment and software to compete on equal terms with ASEAN jurisdictions.

Whose strategy will prevail? Advantages and Disadvantages of the Two Major Gaming Markets

Similarly, Southeast Asia still has to prove that it can seriously challenge Macau.

"While regional competition will undoubtedly divert a certain number of visitors from Macau, the sheer size of Macau's gaming market makes ASEAN's superiority unlikely," observes Andy Choi, the CEO of Macau gaming.

Indeed, even in a year of Macau's slowed economic recovery, the projected gambling revenue of $22 billion USD doubled that of the rapidly developing Southeast Asia. The population of mainland China, neighboring Macau and its primary market, is more than twice that of Southeast Asia, and its nominal GDP is five times larger, doubling the GDP per capita of ASEAN.

Plus, Macau boasts a critical mass of properties and attractions that make this "Asian Las Vegas” extremely attractive compared to individual properties in other countries.

Macau has undeniable advantages over Southeast Asia with the tourism potential of mainland China, its proximity, common language, and familiar food.

Additionally, Chinese authorities have threatened individuals and destinations with severe penalties for gambling abroad, while simultaneously curtailing illegal money transfers and gambling promotion activities.

In contrast, there are China's internal economic problems and the slow resumption of international flights. It's no surprise that mainland tourism across Asia has not yet approached pre-COVID levels. Moreover, in China, there are no legal means to enforce gambling debts, so casino credit involves huge risks for the establishment.

All these realities significantly impact Macau.

Experts estimate that the gaming market in Southeast Asia is strong and only getting stronger. At the same time, Macau is not relinquishing its position and is rapidly trying to catch up to its pre-COVID profit levels by investing billions in infrastructure and social policy.

Time will tell whose strategy will prevail.