If you mistook Macau for a Hollywood movie set the other day, we don’t blame you. China’s gambling hub, Macau, just opened its brand new casino, Studio City, and a handful of stars were on hand to celebrate.
We’re talking big time movie stars, including Leonardo DiCaprio, Robert De Niro, and director Martin Scorsese. They were all on hand to usher in a new era of gambling in Macau as the $3.2 billion Studio City project opened its doors.
And it’s a pretty big deal. The entire complex is themed after movies and many are wondering if Las Vegas will replicate the complex (after all, Macau is famous for replicating Las Vegas properties, like the Venetian for example).
The complex features a Batman flight simulator ride, a figure-8 Ferris wheel, and jaw dropping Art Deco architecture. But despite its size and scope, many are wondering if the casino will be a big failure.
The property was proposed and built during a time when profits were at an all-time high, whales were flocking to Macau in droves, and casinos were raking in 10x more than Las Vegas. But over the last year, just as construction workers were putting the finishing touches on Studio City, the Macau market tanked.
Macau, which is about a 1-hour ferry ride from Hong Kong, is the only destination in China that houses legal casinos. Even with the decline, the few dozen casinos make about 7x the revenue than the Last Vegas Strip does.
But revenue is falling. Wealthy Chinese high rollers have suddenly got bored with Macau. They’re now looking for more exotic destinations like Vietnam, Cambodia, the Philippines, South Korea, and even a place called Vladivostok in Russia’s Far East.
The decline in traffic is apparent. Casino floors seem emptier and revenue has continued to fall for 16 straight months. While the new Studio City complex will no doubt bring some people back, it’s not quite clear if it’s exciting enough to bring everyone back.
The opening of the multi-billion dollar complex is reminiscent of what happened in Atlantic City. The Revel was proposed prior to the financial crisis of 2008. It went through a series of ownership changes before finally opening its doors in 2012 at a cost of $2.4 billion. Less than 2 years later, it closed its doors, unable to lure in players amidst increased competition.
No one is suggesting that Macau will close its doors anytime soon. After all, while revenue is dropping, the casinos there still remain profitable. But Macau was once the only gambling option for folks in China. Now the biggest high rollers have their choice of where to go and lots of casinos are throwing money their way to lure them in.
That’s a lot like Atlantic City. It was once the only gambling option on the east coast, and the biggest gambling destination outside Las Vegas. Now Pennsylvania, which is right outside Atlantic City, is the top casino revenue generator after Nevada. The big whales no longer have to head to Atlantic City if they don’t want to.
We’ll be watching the Studio City situation over the next few months to see they do in terms of revenue. But we’d love to hear from you in the mean time. What do you think? Is Studio City another Revel? Or is this a game changer? Sound off below and let us know.