China's push to rebrand the island of Macau as a family-friendly destination has sent casino operators in a frenzy to come up with non-gaming offerings. Operators who do not fall in line with the government's goals will risk not being able to renew their gaming licenses, which will all expire in 2022.
Major casino operators in the Asian gambling Mecca have already pledged billions of dollars to develop different attractions that do not involve gambling.
As of the moment, the only casinos that are likely to pass the government's scrutiny are Sands China and Galaxy. Ever since China announced its intentions for Macau, there has been a spending frenzy on the island, with casinos hurriedly developing family-friendly attractions.
According to reports, casinos on the island have spent an estimated $10 billion in non-gambling attractions. These types of investments are often hard to monetize, with most not really earning the casinos any income.
These types of attractions are often free to visit for tourists, some of which are merely sightseeing and have no intention of gambling away their money.
Non-gaming attractions have become a key condition in the continued operations of companies in Macau. Different companies have gradually added attractions such as restaurants, hotels, retail outlets, but officials are pushing the firms to create bigger projects centered on entertainment, art, and conventions.
China has warned casinos on the island to immediately diversify their offerings and to include more attractions aside from gambling. The move comes at a very precautious time for gambling operators as gambling revenue continues to slow down. High rollers that have traditionally played in Macau are now being attracted to new destinations such as Cambodia, Vietnam, and Russia.
In the past, casinos in Macau could easily promise a 20 percent return on invested capital. However, things have drastically changed and operators are now hard-pressed to offer that guarantee. According to the research firm Union Gaming, only the biggest and best gaming operators will be able to survive China's transition. Analysts at the firm predict that smaller operators may not be able to curb losses, with some likely going out of business or are denied licenses because of a lack of diversity in their offerings.
As previously mentioned Sands China and Galaxy are among the possible survivors of the cull, mainly thanks to their existing attractions. Sands has become popular due to their Italian and French themes, while Galaxy offers attractions such as high-end cinemas and a full-scale wave pool.
Sands recently acquired British soccer superstar David Beckham as its ambassador, a move which Sands aims to capitalize with the addition of a British-themed project.
