October brings potential for Vegas, Macau

October brings potential for Vegas, Macau

September 12, 2018 3:00 AM
by

There are many challenges in the world of high-end casino gaming, casinos have to find the customers, get them to come to their properties, hope they play, hope they lose (which does not always happen) and then collect the money the players lost.

In the old days we used to say we have to win the money twice, once on the casino floor and then again in the collection of the debt. Because of regulations requiring much stricter standards around offering gaming credit, the collection aspect has gotten a bit easier but with expanded global gaming providing so many more casino choices to the players it has become more difficult to attract the high-end players.

Amid this competition the US has trade wars, seemingly almost with every major country, so with higher-competition for the customers and trade wars why would I be so bold as to suggest October could be so awesome for Macau and Las Vegas?

While my ego would love to claim some very intelligent interpretation of economic statistics, subtle interpretation of player trends and global funds movement, my inspiration to examine such areas came from a friend looking for a private jet to charter to fly him and his associates into Las Vegas from Los Angeles in a few weeks at the start of China’s National Day Golden Week.

For those not familiar, mainland China has a holiday Oct. 1-7, during which somewhere near 700 million people in China are expected to travel. My friend called as he could not find a plane from his usual sources because they were booked. He was hoping I could help him out.

Intuitively, from the trade wars, I had expected a tightening in the high-end market but in digging around, it seems in anticipation of expanded trade conflicts a fair number of manufacturers amped up their production and shipped as much product to the United States as possible, and while all this was going on the US dollar strengthened against most Asian currencies.

Translation: Many Chinese manufacturers have been selling more product in the robust US economy for dollars that are worth more in their home currencies than a year ago, spiking some entrepreneurs’ personal profits and employing more people, at least for the short-term, in their home countries. If I were still running a property this would be music to my ears, particularly when it happens in the Asian demographics.

While National Day Golden Week usually does not generate the extra pocket money for employees, friends and families like Chinese New Year does, it is not uncommon for an extra week or two of wages to be given out during this time. (At Chinese New Year, cash gifts and bonuses are routinely given to employees, family and friends with the amounts often being weeks, months or occasionally a year’s worth of wages).

Add to the mix expanded capacity in Macau, along with improved transportation infrastructure and October being normally the best month for casinos in Macau, and there is a very good chance October 2018 could be a record gaming revenue month, particularly if luck is on the casino’s side.

While that somewhat explains Macau, what about Las Vegas? As a result of China’s crackdown on corruption and relatively high tax rates, more mainland Chinese entrepreneurs are keeping their money in the US and, shall we say, enjoying more of life with it.

Using my friend as an example, when he comes to Las Vegas he normally comes with a few hundred thousand and rarely with anyone else. This time though he is rolling large and he and his friends are planning to bring a few million each and really test their luck.

Admittedly, the story of a few people does not make for an assured trend. However, it was fascinating to me that they were having difficulty finding a private plane to bring them to Las Vegas and getting enough suites to stay in at their preferred Las Vegas Strip resort, suggesting October high-end gaming here will be a great opportunity for our Strip’s casinos.

China’s National Day Golden Week, extra money in the gambler’s pocket, plus propensity to gamble usually equal a great opportunity for casinos to make a few extra bucks above their budget targets. Of course, players still have to get into action and casinos still have to win, but things are certainly looking extremely good for serious if not record action in next month for two of the largest gaming meccas – Macau and Las Vegas.