UTM Comments is a partnership between Macau News Agency and Macao University of Tourism
By Suna Lee
Macau is currently undergoing a transition towards a more diversified economy beyond its heavy dependence on the gaming industry. While gaming remains dominant, the government is actively pursuing developments in other sectors including healthcare, finance, technology, and the staging of large-scale sporting, and cultural and business events (“1+4 model”) to keep the contributions from non-gaming sectors at 60% of GDP by 2028. Recent reports suggest that Macau is on the right track to achieve this goal. According to TDM news on 19th May, “Chief Executive Ho Iat Seng revealed that Macau’s gaming industry last year [2023] accounted for 36.2% of the GDP, the remaining being non-gaming elements. He hopes to maintain the number below 40% and continue charging towards moderate economic diversification goals.”
Economic diversification became a center of discussion during Covid-19 when Macau experienced a tremendous economic downturn due to its overreliance on the gaming industry. Macau had to face challenges and learn from the experiences. The government quickly acted on new economic diversification plans. In January 2023, the new gaming law in Macau, known as Law No. 16/2022, introduced significant changes to the regulation of the gaming industry. Besides changes in the concession regime, it clearly stated that for the next 10 years, the Macau government wants casino operators to focus on non-gaming elements. Six concessionaries (MGM Grand Paradise, Galaxy Casino, Venetian Macau, Melco Resorts, Wynn Resorts, and SJM Resorts) which already operate gaming, accommodation, shopping, and food and beverage outlets, are now required to encourage the development of non-gaming elements and tourist markets from outside China. Under the new law, “Concessionaires will instigate a variety of capital-intensive projects over the next 10 years. The pledged investment in non-gaming amenities and attractions is expected to translate into diverse leisure offerings”. How well and to what extent they achieve these requirements will determine whether or not they will be granted another extension of gaming licenses in 2033.
To successfully fulfill concession requirements under the new law, Macau gaming operators could learn a thing or two from their Las Vegas counterparts. According to Business Insider, since 1999, non-gaming revenue has already reached over 50% of Las Vegas’ revenue, and the image of “Sin City” has been effectively transformed into “Entertainment City”. In the late 1990s, Las Vegas began to pay attention to non-gaming elements including conventions and exhibitions, state of art shows, shopping malls, nightclubs and bars, world-renowned chef’s restaurants, golf courses, museums, sporting events, and entertainments shows. Las Vegas continues economic diversification with the latest example being the Sphere – a premium concert venue for musicians such as U2 and Eagles and a technology showroom for visitors from all around the world, which has further reinforced the message that gaming is not the main reason to visit Las Vegas anymore.
Learning from the Las Vegas case, the focus now should be on discussing how the Macau government and gaming operators can collaborate more closely and support each other to continue sustainable development. Recently, Macau has hosted various international festivals, concerts, conventions, and expos to attract international visitors. This showcases great efforts by the government and industries as part of the diversification project.
The first casino in Japan is scheduled to open in Osaka by the summer of 2030. Several more cities in Japan are currently in discussions about the potential development of integrated resorts (IR). While emergence of new regional competitions appears to be a threat, it also provides a stimulus to seek new ideas and improved tourism products and offerings to reach even greater heights of excellence and customer satisfaction. With increased cooperation between the Macau government and gaming operators, we hope to remain on the right track.
