\nBy Howard Stutz, Las Vegas Review-Journal<\/p>\n
\n\tA policy address by Macau\u2019s top government official this week wasn\u2019t an uplifting and positive message the casino industry and the investment community were hoping to hear.<\/p>\n
\tMacau Chief Executive Fernando Chui told lawmakers on Monday the Special Administrative Region had entered an \u201cadjustment\u201d period of slower and stable growth. Chui, who has been region\u2019s chief executive since 2009, vowed to toughen regulation on the gaming industry when casino license renewals start taking place in the next few years.<\/p>\n
\tThe review will look at how the six gaming license holders \u2014 including Las Vegas Sands Corp., Wynn Resorts Ltd. and MGM Resorts International \u2014 have conducted business since Stanley Ho\u2019s Macau casino monopoly ended in 2002.<\/p>\n
\tThe government wants to review the development of nongaming attractions, the creation of jobs, and the promotion of Macau residents within each company.<\/p>\n
\t\u201cThe government will strive to adjust the pace without changing the momentum, seeking stable growth amid adjustments,\u201d Chui said during the talk, his first policy address since being appointed to a second term.<\/p>\n
\tAlso, Macau\u2019s tourism panel, under the chief executive\u2019s direction, will draft a five-year plan for stable casino growth that will make the region less reliant on casino revenue. Macau, Chui said, will become a center of tourism and leisure travel.<\/p>\n
\tThe wide-open development days have ended. They began shortly after Macau was returned to China in December 1999 after 442 years as a Portuguese colony.<\/p>\n
\t\u201cMr. Chui\u2019s speech was in-line with our expectations,\u201d Deutsche Bank gaming analyst Andrew Zarnett told investors.<\/p>\n
\tWells Fargo Securities gaming analyst Cameron McKnight said Macau wants tighter gaming regulatory policy and more moderate growth.<\/p>\n
\t\u201cThe government will increase supervision of the gaming industry,\u201d McKnight said. \u201cThe policy review will be comprehensive.\u201d<\/p>\n
\tThe steps addressed by Chui had a familiar ring. China President Xi Jinping wants Macau to be more than just gambling. His visit to Macau in December to celebrate 15 years since the Portuguese handover signified that effort.<\/p>\n
\tLast year, the president began a crackdown on corruption in China that focused on junket operators who filled Macau casinos\u2019 high-end baccarat players. Coupled with a slowing national economy, big spending gamblers and middle-market customers curtailed their trips to Macau.<\/p>\n
\tGaming revenue has declined nine straight months \u2014 a 10th straight drop is all but assured in March. The Macau economy economy shrank 17 percent over the last three months of 2014. Gaming revenue dipped 2.6 percent in 2014 to $44.1 billion, the first time since the market was opened that Macau experienced an year-over-year decline.<\/p>\n
\tMacau regulators now expect gaming revenue to decline almost 32 percent when 2015 is in the books, a stunning fall from 2013\u2019s single-year record of $45.2 billion.<\/p>\n
\tMacau has entered a new normal.<\/p>\n
\tChui said the review of license holders was just the beginning.<\/p>\n
\tNext year, Macau will impose a full ban on smoking inside all public areas, including casinos. Analysts believe last fall\u2019s partial casino smoking ban contributed to the revenue decline. Currently, smoking is banned on mass market floors, but permitted in VIP areas. The full ban could add to the high-end revenue woes.<\/p>\n
\tMeanwhile, Chui said there is a \u201cneed to improve and adjust\u201d the issuance of visas to individual travelers from Mainland China. Basically, Macau is overcrowded with visitors. The chief executive wants the visa policy to strike a balance between tourism and the quality of life for Macau citizens.<\/p>\n
\tThe change in direction comes as Wynn, Las Vegas Sands, and MGM Resorts move forward on multibillion hotel-casino projects in Macau\u2019s Cotai Strip region that are expected to open in 2016. Executives from the companies have pointed out the nongaming elements the resorts are bringing to the market.<\/p>\n
\tThe $4 billion Wynn Palace, for example, will have outdoor gardens, an aerial transport system with gondolas and a performance lake. Las Vegas Sands\u2019 $2.7 billion Parisian will have a half-scale Eiffel Tower.<\/p>\n
\tZarnett believes the current downturn in the Macau casino market is cyclical.<\/p>\n
\t\u201cAs such, our confidence in the secular growth story of Macau gaming remains intact,\u201d he said.<\/p>\n
\tChui is Macau\u2019s second-ever chief executive. The position is akin to being a governor, but the job also serves a buffer between Macau and Beijing.<\/p>\n
\tChui was born in Macau and educated in the United States. His undergraduate degree is from Sacramento State and he has a doctorate from Oklahoma State University.<\/p>\n
\tAfter taking over from Edmund Ho, gaming industry leaders were hopeful Chui would expand the market and increase the number of gaming license holders. In his initial policy address in 2010, he eschewed that idea.<\/p>\n
\tNow, with his second term underway, Macau\u2019s chief executive has made his intentions clear. Gaming is an amenity in Macau, not the primary attraction.<\/p>\n
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