Macau slot potential held back by lack of understanding, low payout

There is a large opportunity for the slot machine market in Macau, though growth is being hampered by a lack of understanding of the machines by mainland Chinese and a low payout ratio, according to a leading gaming academic.

Revenue from slot machines last year accounted for just 4.1 percent of total gross gambling revenue in Macau, compared with about 74 percent in Las Vegas.

The Macau government’s policy of creating a more diversified mass market destination, coupled with a cap on the number of tables, is expected to favour growth of slots and electronic gaming.

Zeng Zhonglu from the Gaming Teaching and Research Centre (GTRC), Macao Polytechnic Institute, told a panel at the Macau Gaming Show that the slot market could eventually grow to account for about 30 percent of total GGR.

However, for that to happen there needs to be changes to overcome the dislike of slot machines by the mainland Chinese.

Zeng said he had conducted market research to find out why the Chinese were reluctant to embrace the machine market and found that about 70 percent of 1,000 respondents in a survey of mainland visitors said their main reason for avoiding slots was that they did not know how to play.

“When people come to Macau if they don’t know how to play table games they can watch people play and they can have VIP representatives teach them how to play baccarat,” he said. “For slot machines, they can’t stand by another player because it’s not polite so they can’t learn by watching.”

The second main factor affecting their decision was a lack of time. Given most of the visitors in the main halls were on day trips they preferred to gamble on the tables and use any time to sight-see and shop.

He added that they are also put off by a low payout ratio, of less than 90 percent, compared with about 94 percent in Las Vegas and between 92 and 94 percent in Australia.

“Too low a return rate is another reason for low participation in the slot machine market,” he said.

Other participants on the panel said growth in the market is being hampered by the fact regulation is not keeping pace with technological changes.

“With this regulation we currently cannot promote new technology into the market,” said Changbin Wang, who is also from the GTRC. “So far we don’t have mobile devices in Macau because the government doesn’t have the ability to regulate it, so because of the government incapacity for doing that mobile technology cannot be introduced into Macau, so I think the government needs to update themselves.”

Roberto Coppola, global director of market research and consumer insights at YWS, added the potential integration of mobile technologies represents a huge opportunity for casinos.