Eating Las Vegas' Lunch
Matthews Asia
By Satya Patel
September 7, 2012
Since opening its casino industry to international companies in 2002, Macau has become a global gaming center. In 2011, Macau—a special administrative region of China—brought in US$33.5 billion in gaming revenue, more than five times that of the Las Vegas Strip. Gaming operators have gladly built multibillion dollar facilities in Macau because each new casino seems to attract increasing mass market and VIP gamblers. Furthermore, Macau’s closeness to China has led the tiny territory to benefit from the rising wealth—and penchant for gambling—of many mainland Chinese.Â
Though Macau is without question Asia’s highest-profile gaming destination, it is not the region’s only option. Southeast Asian governments are also nurturing the gaming sector as a way to drive tourism and increase tax revenue. In 2010, for example, two casinos opened in famously conservative Singapore that cost over US$10 billion to build.
The Philippines has followed suit with several casinos under construction in Manila’s Entertainment City, where operators hope to draw locals and work with junket operators to a win a small slice of Macau’s gaming pie. Philippine casinos are generally smaller in scale than those in either Macau or Singapore. However, with their focus on the local market and wealthy international patrons who might not be considered VIP high rollers in Macau, the Philippines could carve out an attractive niche in the market.
Cambodia may be Asia’s most surprising gaming market. For most people, Cambodia conjures up images of the majestic Angkor temples or the atrocities of the Khmer Rouge. But I recently visited a Cambodian casino that buzzed with activity, where Malaysian and Vietnamese tourists had gaming on their minds. Gaming tables were surrounded by crowds, three or four people deep, who eagerly awaited the outcome of each hand. A cover band from the Philippines performed next to a high limit gaming area, and all around the atmosphere was quite “Vegas.”
As more and more countries grant gaming licenses, there may be
concern that the market in Asia will be oversaturated. Thus far,
however, operators have tapped into latent demand from across Asia, and
are taking advantage of growing economies. All of these operators may
co-exist by not trying to compete with Macau for high-end VIPs, instead
focusing on locals and those within easy travel distances. With new
casinos planned in Vietnam and elsewhere in the region, Asia’s gaming
market should remain exciting for both tourists and investors alike.
You should consider the investment objectives, risks, charges and expenses of the Matthews Asia Funds carefully before making an investment decision. This and other information about the Funds is contained in the prospectus, which may also be obtained by calling 800.789.ASIA (2742). Please read the prospectus carefully before you invest or send money as it explains the risks associated with investing in international and emerging markets. Investing in international and emerging markets may involve additional risks, such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. Fixed income investments are subject to additional risks, including, but not limited to, interest rate, credit and inflation risks. In addition, single-country and sector funds may be subject to a higher degree of market risk than diversified funds because of concentration in a specific industry, sector or geographic location. Investing in small- and mid-size companies is more risky than investing in large companies as they may be more volatile and less liquid than large companies.
The subject matter contained herein has been derived from several sources believed to be reliable and accurate at the time of compilation. Matthews does not accept any liability for losses either direct or consequential caused by the use of this information.
Matthews Asia Funds are distributed in the United States by Foreside Funds Distributors LLC
Matthews Asia Funds are distributed in Latin America by HMC Partners
© 2012 Matthews International Capital Management, LLC. Matthews Asia® is a registered trademark of Matthews International Capital Management, LLC.
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