MACAU -- Pinched by a prolonged economic slowdown as well as toughened regulations by authorities in mainland China, Macau, Asia’s largest gaming market, has been in a downward trend for the last two years.

Its revenue dropped by 34 percent last year. The numbers of visitors -- both from the mass and VIP market -- declined, raising concerns of stakeholders in the region about its sustainability.

Despite the gloomy outlook, industry officials and investment experts are seeking new momentum for growth, with new mega-sized resort projects in Macau coming up in the next few years. However, the Asian sin city aims to no longer target high rollers for growth and instead turn to the mass market. The city is also desperate to find a new identity, according to experts attending the annual G2E Asia, a premier gaming exhibition and conference held at Venetian Hotel in Macau.

Leading operators are reaching out to lure mass customers, particularly from mainland China. Galaxy Entertainment, Wynn and MGM are planning to launch new integrated resorts in Macau and to expand nongaming contents such as shopping, theaters and family-themed restaurants in the casino-packed Cotai area.

Large-scale infrastructure projects are also underway.

A 42-kilometer bridge connecting Hong Kong Airport to Macau is set to open in 2019, just as the Guangzhou-Zhuhai Gongbei railway is expected to deliver a growing number of middle-class families from mainland China.

“It is no longer the days of these high rollers and VIPs coming here, betting big. Part of that is China’s anticorruption campaign. ... People with the money have this fear to come here,” said Margaret Huang, a consumer expert with Bloomberg Intelligence Hong Kong.

“For that reason, there should be a mass market and it is also a way to make a long-term, sustainable business model for Macau,” she said.

Despite having 30 million visitors a year, Macau has been losing its appeal, particularly in China.

“When we surveyed the Chinese middle class, Macau scores quite low as a desirable tourist destination and primarily appeals to more hard-core gamblers,” said Aaron Fisher, head of consumer and gaming research at brokerage and investment group CLSA, in his presentation delivered at the annual G2E Asia conference, adding that South Korea ranked top on the list.

“There is a creative industry that allows ideas like K-pop and K-drama ... and they are bundled perfectly with in-house, Korean-made products like cosmetics,” said Huang.

“That is maybe a challenge for Macau ... what identity it can have.”

iGaming

With the prospect of Macau as the leading gaming market being discussed, the annual conference also featured a growing number of iGaming businesses.

This year’s event has featured more than double the number of iGaming exhibitors from last year, organizers of G2E Asia said. Over 65 percent of these are new companies, they added.

The common concept of iGaming is to provide a real-time experience to mobile users, allowing them to bet their money, or credit, online and play with real casino dealers.

Some developers have even introduced virtual reality programs so that users feel they are in a real casino.

A sales manager of a Taiwan-based iGaming system provider BBIN said the competition of the new business is high, although such games are illegal in most of the countries, except for the Philippines.

Experts say such a business is in line with the emergence of newer generations who are familiar with the technology. It has the potential, but it has no immediate impact at the moment toward the gaming industry.

“If the regulation is relaxed enough, this is one of the big things that can take off. Perhaps this is why the governments are very wary about the business as well because its impact will be phenomenal,” said Catherine Lim, senior consumer analyst with Bloomberg Intelligence.

Josephine Lee, executive vice president of Reed Exhibitions Great China, also said the evolving iGaming business and the technologies applied to the online products could generate synergy effects with the existing casinos.

“IGaming is bringing a lot of new elements to land-based casinos to operate the business more effectively,” she said.

“You can see a lot of IT systems, cloud platforms and payment systems. ... These help land-based casinos to operate more effectively. Casinos are not all about machines. It is about solutions that help operators to foster the thinking what they can do in the future.”

The G2E Asia, an annual event in its 10th edition this year has brought over 9,000 visitors from gaming operators and regulators in 95 countries around the world. The event was co-organized by Reed Exhibitions and the American Gaming Association.

The conference is a networking platform that brings leaders of government, industry and diplomatic community together. High profile officials included Kou Ming, deputy director of economic affairs at the liaison office of mainland Chinese government in Macau Special Administrative Region and Paul Chan director of gaming inspection and coordination bureau.

Leading industry officials including Wilfred Wong, president of Sands China and Jorge Neto Valente, group advisor of Galaxy Entertainment Group also attended the opening ceremony of the conference.

On sidelines of the event, Las Vegas Sands was named the best casino operator along with Galaxy Macau as the best integrated resort.

This year’s event has focused on the ongoing transformation of the Asian gaming industry in the face of slowing economy.“Crises are important opportunities that help operators (reassess) the business from different perspectives,” Lee said.

“I think now is the time to think how to diversify the business ... how to draw more people, noncore gaming players like families, to enjoy themselves and get entertained. ... After all (whether they play the games or not) it all comes from one pocket,” she said.

By Cho Chung-un (christory@heraldcorp.com)

Korea Herald correspondent