Becky’s Affiliated: An update on Macau’s gambling industry with Andrew Scott

Andrew Scott

Andrew Scott, Vice Chairman and CEO at Inside Asia Gaming (IAG) and O MEDIA has been in the gambling industry for 34 years, living in Macau for the past 11 years and focusing on the entire Asian continent. Pre-COVID, on average, Scott flew weekly, constantly visiting neighboring Asian countries such as the Philippines, Japan, Singapore, Cambodia, Thailand and Taiwan in addition to making long haul trips to the U.K. and Australia, for example, to attend major industry events.

Aside from a small case of “cabin fever” due to being stuck on a 33 square km island for almost a year, Scott and the IAG team have been plugging away, enjoying a flood of traffic to their site and executing top industry events, albeit with new social distancing rules and other COVID-related restrictions.

In general, I have always found Asia to be a strange yet fascinating region within our industry, especially now during a time of COVID. To shed some more light on what’s happening on the other side of the globe, I spoke with Scott who was happy to share his insights with us – I hope you enjoy them as much as I do.

Becky Liggero Fontana: It’s a pleasure to speak with you today, Andrew. Thank you. Lets start with what the COVID situation is like in Macau – how is the government keeping it under control?

Andrew Scott: We are so lucky that Macau is arguably the most covid-safe place in the world right now. We’ve had zero deaths, only 47 cases, and only two cases (neither of which were local transmissions) since April 2020. One was in June and one was this month on a special flight from Europe via Japan, but that flight was conducted like a military operation with all passengers in full PPE, all passengers tested before and after, and the one person who tested positive on arrival was immediately transported from the airport to isolation in hospital and is basically being protected like the crown jewels. I can’t give the Macau government enough praise for their covid response — they have simply done a magnificent job protecting the people of Macau. I’m actually very proud of them. We’re taking this very seriously here in Macau. Mask wearing in public is ubiquitous other than when eating and drinking, health declarations are required when entering any casino floor, all visitors to Macau must be tested and testing is widely available in the resorts. If someone does get covid, the health authorities swoop on them, get them isolated, and immediately go into contact tracing — almost like some kind of SWAT team. It’s so impressive.

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BLF: It really is. Wow! What impact has the COVID situation had on your events such as the Power 50 and your Macau After Dark gatherings?

AS: Because of this great situation in Macau, we were able to run the 13th Asian Gaming Power 50 in November last year. It was fantastic, went off without a hitch, and many people said it was the best one ever. We had the tables spaced out more than usual and only 8 per table on tables designed for 12 people, instead of 10 per table on tables designed for 10 people. We limited it to 240 people instead of the usual 300+. But you know what, because of the extra space and fewer people per table, it felt just as big and if anything actually felt more grand and luxurious than usual! The biggest change was that it was essentially a Macau-only event, given the travel difficulties. But I have to give a huge shout-out to Solaire casino in Manila. Understandably, they couldn’t be here in person — apart from one employee who happened to be in Macau and who, flying solo, admirably waved the Solaire flag. But despite this, Solaire and its owner Bloomberry Resorts fully supported the event as they usually do with the sponsorship of the Bloomberry-Solaire Red Carpet Welcome Cocktails, which we live-streamed over IAG’s Facebook page. I really have to thank Bloomberry Chairman and CEO Mr Enrique Razon Jr and President and COO Tom Arasi for their solid support in such difficult times. I also have to deeply thank Dr Wilfred Wong, President of Sands China who provided the venue of the Parisian Ballroom and all the other sponsors who stood by IAG and the Power 50. It was just a delight to be able to hold the event and it was a real morale boost for the industry — everyone able to dress up in black tie and forget about the pandemic for a night and enjoy themselves with such a wonderful gala dinner.

This year we plan to run MAD events in March, June, September and December, and of course the Power 50 is always held on the first Friday in November, so that’s already locked in for Friday 5 November 2021. We’re so lucky in Macau to be able to do these events, and that’s directly down to the Macau government’s excellent handling of the pandemic, so we couldn’t be more grateful to them. I’d like to say that as long as we keep them Macau-only events, there’s no risk involved, but perhaps it’s better to say there’s very little risk involved.

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BLF: Ah, I love hearing about the support you received from your sponsors, this just goes to show what an amazing industry we are in. I cannot imagine having these types of events here in the U.K. anytime soon, big or small…what a difference! What are your thoughts on Macau-based (in-person) expos and other big Asia-based expos actually taking place in 2021?

AS: I could give you the politically correct answer, and then I could give you what I really think. Let’s go with the latter. To be honest, it’s going to be a struggle. The problem is not Macau, we are (touch wood) quite ok here, no coronavirus here to worry about. The problem is travel. We’re currently imposing a 21 day in-hotel quarantine on arrivals, followed by 7 days best described as “self-control”. The only exemption from this is for visitors from most (but not all) of mainland China. Given these rules, it’s impractical to visit Macau for an event that might last say three days. I think we will start to see many more hybrid events, with locals attending in person and international visitors attending online.

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BLF: I absolutely agree with you and think the same hybrid trend will start picking up in the West, once its safe to have an in-person component, of course. In the meantime, what are some of the innovative ways gambling operators and other businesses in Macau are coping with the current COVID restrictions?

That’s a good question. It’s a real challenge for the business community, both non-gaming and gaming, but we have seen some good initiatives and methods emerge. Just like with the rest of the world, anything online is experiencing massive growth. Even traffic on our own website, asgam.com, is booming. Everyone has their food ordering apps and many people are eating at home instead of going to restaurants. Our resorts have been hit hard of course, but we’re bouncing back. All of the properties are back to operating at breakeven or better, after suffering some pretty hefty losses in 2020. Most of the resorts are finding innovative ways to reduce their labor costs without actually getting rid of staff, such as two for one annual leave, where employees take a day of annual leave, and get given two days off. There’s quite a bit of non-paid leave going on. And many of the resorts are taking advantage of the relatively low cost of capital to borrow big to build cash in their war chests to help them ride this thing out.

Andrew Scott in an event

BLF: All very interesting and I’m delighted to hear IAG traffic is booming. As someone who has such a deep understanding of the region, can you share some predictions on what will change in the Macau gambling space post-pandemic?

AS: Wow, you could write a book on that. I’ve heard everything from “business as usual” to “it will never be the same.” It’s crystal-ball gazing, but there are three key themes emerging.

The first theme is a reduction in VIP play. There will always be a place for VIP in Macau, but instead of being around 50% of the GGR like it has been in recent years, it might settle at 40%, 30% or maybe even 20%. It’s a long way from the 80% that it was when I first arrived in Macau. This reduction in VIP is why you see the major junkets looking to diversify their businesses — such as Suncity becoming an IR operator in Vietnam and the Philippines, and Tak Chun acquiring Macau Legend and its Fisherman’s Wharf property.

The second major theme could best be described as “less visitors, better visitors”. I think you’re going to see less focus on getting huge visitor numbers to Macau, so the nearly 40 million visitors we got in 2019 might stand as the record for many years. We might start to eschew the “flag followers” (as I call them), that is the tour groups who just follow a flag-waving tour guide, wear out the carpet, maybe stay in Macau a matter of hours and don’t really spend much money while they are here. Instead, I think we will focus on targeting more substantial visitors, perhaps families, where Mum might go shopping at some of the luxury stores, Dad might play a bit in the casino, and the family can enjoy some activities together — staying for a few days and trying out a range of F&B outlets while they are here. Less visitors means more social distancing in the IRs.

The third theme is meticulous attention to detail when it comes to cleanliness, hygiene, food safety, social distancing and so on. This is becoming a real touchpoint for the industry and something the IRs are now marketing to their visitors. We never saw that before, but I suspect it will become a point of difference IRs try to use in their marketing for years to come.

Andrew Scott

BLF: Incredibly insightful, thank you! And now for my favorite question- what potential do you see for the growth/adoption of blockchain and/or digital currencies in the Macau gambling industry?

Right now that has been pretty much shut down from a regulatory point of view. But when a Chinese-government issued digital currency comes along, which it will, that could easily change. Watch this space.

BLF: Oh yes, we sure will! Last burning question- are we ever going to see licensed online gambling in Macau?

AS: Yes, I think so, despite the fact there is zero political will right now and it seems an impossibility to many in the online gaming industry. Personally I think it is inevitable, just like it is inevitable that almost everything will eventually go online, but it is going to be a very, very slow process and it will be introduced salami-slicer style, with tiny little changes bit by bit, and only with the approval and blessing of the Macau and central governments. To elaborate, a first step might be digital transformation of bricks and mortar gaming simply from a technical point of view — for example instead of using chips, baccarat bets might be placed pushing buttons at the table, like an electronic table game. Then, those buttons might find themselves on some sort of detachable tablet, that players could walk around the casino floor with. Then, maybe the rules might change so that the players could take that tablet to their room. And so on and so on. You get the idea.

BLF: Yes I do, sounds like such an exciting opportunity and fingers crossed. Thank you so very much Andrew, it has been an absolute pleasure learning from you today. With any luck, I’ll look forward to seeing you at ICE London 2021!

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