A Sustainable Casino Business Model in Macau

by Desmond Lam

A sustainable business model in Macau requires sharing and it begins now. To operate well in this environment requires an understanding of your local community and catering to their needs. You may call it public or community relations. But it is really about loving and caring for the local community that you operate in.

When people talk about Macau, they still refer the tiny city as Asia’s Las Vegas. People need to understand that (1) it is not and, most importantly, (2) it does not intend to be. The impact of casinos on the local economy has been great. Gaming revenue from games of fortune makes up a major portion of the city’s domestic income. Still, the city’s rapid rise in wealth is not felt by everyone. There have been lots of complaints by the local community. This is a small city that is less than 30 square kilometers. Its population of half a million is making way for the roughly 20 million visitors that arrive every year. And there are now 25 casinos here. Grand Lisboa just opened. Soon it will be followed by Crown, Venetian Macau, MGM Grand Macau, Galaxy Mega Resort, City of Dreams and others.

Recently, I noticed a lot of ‘noise’ relating to the proliferation of casinos in the city. Cases of negative social externalities seem to have been picked up by the media. People that I know - close friends, shop owners, restaurant waitresses, car dealers, and even cleaners at my apartment have complained to me about the negative side-effects of burgeoning casinos. Media coverage on problem gambling and labor shortage affecting other businesses is relentless. There is a general feeling that the growth of casino gaming appears to bring much benefit to the government, casino operators and tourists but not so much to the local community.

I recently read an article that painted a grim picture of Macau’s future development. A city without doctors and policemen. A city where most of our ambitious young school leavers would join the exciting casino industry as dealers. They have chosen to join the industry at such early age in order to battle rising costs of living. They would do so at the expense of further intellectual development through tertiary education.

A sustainable casino business model will require a multi-dimensional approach. It requires you to pay attention to your customers, employees, investors, and other public stakeholders like the local community. It requires an active management of perceptions towards the casino. Simply having a responsible gaming program that caters to your own staff is insufficient- that is merely seen as a form of aesthetic business-oriented behavior by the local community and government. Moreover, problem gambling is just one issue that the local Macau community is currently facing. There are other key issues like inflation, general decreasing labor quality, and labor shortage. Casinos here are seen by some locals as the evil that causes these damages.

Hence, casino operators need to reach out to the local community and help the locals to improve their conditions. You will need to build a good community relation and be seen as a good corporate citizen. Up till now, this has not been the case – at least in perception. There is much to be done to carve Macau into a healthy gaming entertainment city. In an environment where businesses are growing so much faster than what the Macau government can cope with, casino operators need to take stronger initiatives than they are currently doing.

It is not just about giving, it is about sharing. Sharing of resources means not just giving money in the form of taxes and charity. Casinos have resources beyond that. It has teams of experienced employees that are perhaps among the best that Macau can offer. It has employees who are both international and brilliant in their business operational skills. Casino operators can share these resources with the local community like providing ad-hoc training or general education to the small local businesses. This can be done through collaboration with local universities, institutions or simply doing it yourself.

Love your dealers. Train them and treat them well. They are all Macau residents and they are your ambassadors to the local community. Give them room and prospect. Groom them and let them grow. Educate them in all areas, even beyond casino operations. Give them a chance to move to areas like hotel management and event planning. They are among the best assets in Macau and kind words from them help build a positive image of your casino.

Macau is growing but there are risks. This is a small place and the local community has as much stake in this city as the casino operators themselves. Everybody stands to lose if the battle for the hearts and minds of the local community fails. We are in this together and should work together like a big family. This would mean listening, caring and sharing. For hundreds of years in Macau, East has worked (well) with West. This is and should be the spirit of Macau.

Date Posted: 12-Apr-2007

Desmond Lam is an Assistant Professor at the University of Macau. He can be contacted at DesmondL@umac.mo.