Wynn Macau: Gambling on the Edge of China

1. How would you characterize competition in the gaming industry in Macau?

The gaming industry was monopolized by Stanley Hos S.T.D.M before 2001, then
there are six players in the oligopoly market.

2. From the institution-based view, what institutional developments have

facilitated the development of this industry?

a. The introduction of the Individual Visit Scheme (IVS) in July 2003 gave the
number of mainland tourists visiting Macau a boost, which made its main
customers fewer restrictions to enter.
b. Supply-side dynamics of gaming operations in Macau determined by institutional
factors, such as by Law no. 16/2001 and Administrative Regulation no. 26/2001.
This made the further concession contracts, in other words, made the monopoly
market turn into oligopoly market.
c. The number of gaming tables that casinos are allowed to provide has significantly
increased, which means a main source of gaming revenues grew fast.
d. Legalization of junket operators secured gaming revenues for VIP tables in 2010.

3. What resources and capabilities were behind the performance of Wynn

Macau?
Value: The high yield it generates in its mass, VIP, slots and non-gaming
businesses (not rely heavily on VIP tables as many local casinos).
Rarity: Solid financial strength and the luxury property development made
Wynn successfully positioned to cater to the upper end of the market.
Imitability: The two prestigious Mobile Five-Star ranking awards reinforced its
leadership role in the transformation of Macau into an international travel and
leisure destination for the most discerning guests.
Organization: The industry structure is very benefit to Wynn: the oligopoly
market, which only has 6 players; the barriers to entry is high due to large
capital investment and the very limited entry contracts; the government policies
supported the gambling industry (introduction of IVS giving easier Visa).

4. Recent developments may affect Wynns future performance?

Yes, the anti-corruption policy had significant affect on Macau. According to the
data published in Feb. 2015, the gambling revenue declined 17.4% compared to
last year. The Chinese central government wants Macau to get rid of the
dependence of VIP table revenues and to develop a customer-driven, family-
friendly tourist destination. Also, the crackdowns on prostitution in January.2015
also significantly affected Macaus economy.

5. Discuss the various stakeholders positions, debate the pros and cons.
Conclusions?

Positions Support (Pros) Opposition (Cons)

Stakeholders

Residents A kind of entertainment Negative effect on

peoples psychological
health (lazy and greedy);
arouse criminal offence
(corruption, money
laundering)

Government officials They can have both positions as the residents and the
casino beneficiary have.

Possible casino Stimulate regional

beneficiary: casino economy; attract foreign
owners, employees and tourists; increase
related industry benefited employment; avoid the
parties illegal or underground
gambling parties (which
might cause a series of
criminal activities).

Conclusions:
Gambling can be a tool to drive economic growth for a region; it might have some
negative effects, but effective implementation of regulations can control its
development direction.
In this case, Macau relies heavily on revenues of VIP tables, its main customers are
form mainland China who was point out lots of them were evolved with corruption.
The anti-corruption actions of Chinese central government made Macaus economy
hammered and declined for continuous 8 months already. To survive in this
situation, also as encouraged by the Chinese central government, the Macau casinos
are going to make themselves more diverse to attract tourists. For example, some of
them are making turnaround strategy by offering more kinds of entertainment
(lottery, gambling on the horse racing and dog racing, shows, etc. ) putting more
focus on building a multifunctional and leisure tourism destination (shopping,
convention and exhibition, culture and heritage) .