FOCUS

2020 in review: Don’t look back in anger

Now an Asia Gaming Brief tradition, the December edition of our Focus section gathers views from industry figures on the key events of the past year and asks them to gaze into a crystal ball to divine what the year ahead may hold.

Over the years, many of the answers have been remarkably prescient in their forecasts for the near-term direction of Asia’s gaming industry. However, we can safely say that no one came anywhere close to guessing what 2020 may have had in store!!

As we limp towards the end of the year, our commentators talk about what surprised them most in how companies have handled the pandemic. Most say they missed the live events and social gatherings, highlighting that although digital is an invaluable tool, it won’t replace social interactions, which is surely good news for an entertainment-based industry.

They are expecting a recovery in 2021, but nothing as fast as had been initially hoped when the pandemic first hit. Governments around the region are expected to be highly cautious in opening up their borders until widespread availability of vaccines cuts infection rates to a minimum.

In terms of individual themes, that aren’t Covid-19 related, commentators pick out Macau and Australia. They explore the upcoming concession renewal process and whether the government would, or should, take the decision to delay, given the crisis and the lack of preparatory framework for how the tenders will be carried out.

There is also considerable focus on Crown Resorts and the regulatory hornets nest it may have stirred up in Australia. The company will hear what sanctions it may face early in the New Year, as a result of shocking revelations of mis-management during a suitability hearing in Sydney.

Some argue that given the fact best practices should now be global, the regulators’ deliberations may have further-reaching ramifications.

Positive shoots and lessons learned

As Macau celebrated the 20th anniversary since the handover to China last December, there was no indication of how the gambling hub’s fortunes were about to change so radically.

This year, there appears to be little cause for celebration, with the global pandemic having halved the size of the local economy and caused a plunge of about 80 percent in annual gross gambling revenue.

Macau heads into 2021 with more uncertainty than it has faced in recent years. Recovery from the crisis has been slower than anyone forecast and remains vulnerable to new outbreaks of Covid-19 until a vaccine program is well underway.

While late in the year, the prospect of Macau adopting China’s digital yuan has further shaken the market, casting significant doubt over the survival of the junket industry and with it the VIP gaming sector.

Although the short-term future continues to be doubtful, analysts agree the longer-term outlook remains intact and the pandemic has highlighted positive elements and provided a context for change.

The Macau government has been widely praised for its handling of the crisis. The first case in the territory was discovered on January 22 and on February 4 CEO Ho Iat Seng took the unprecedented decision to shut the 41 casinos for two weeks.

Border controls were put into place and a system to ensure citizens were supplied with adequate face masks. A study from the Macao Polling Research Association, made in July, showed that 94.7 per cent of the respondents are satisfied with the overall performance of the Macau government in dealing with the prevention of the epidemic.

Macau has had a total of 46 cases of the disease and no deaths.

“Frankly speaking, the Macau Government has performed admirably well throughout the pandemic with proactive and decisive leadership and generated community support focusing on public health and safety as well as economic and social stability,” Jay Chun, head of the Macau Gaming Equipment Manufacturers Association said.

Government measures were put in place to help small and medium-sized businesses and struggling families. The operators were encouraged to keep the lights on and their staff employed.

Despite having little to no income and not much wiggle room when it comes to cutting costs, the six operators managed to improve efficiencies, with the first reporting that they had turned EBITDA positive in October.

Galaxy Entertainment said its daily operating expenditure has come down from $3.4 million prior to the crisis to $2.3 million in Q3, allowing breakeven at a much lower level of revenue. Most of the others reported a similar picture. At the beginning of the year, there had been an expectation for a v-shaped recovery, led by the VIP sector. That hope has long faded and now projections are that it will take until at least 2022 for the market to regain its 2019 levels and longer still for the VIP market to recover.

Premium mass and later mass is expected to lead growth and analysts say further out this improved sector mix will have a positive impact on operators’ margins.

Significant question marks remain over the VIP sector, with the prospect of a digital yuan being introduced raising concern about the survival of the junket operators.

The Gaming Inspection and Coordination Bureau has denied that it has been in talks with operators about the possible impact of the introduction of the currency.

However, Beijing is fully embracing the concept and has been conducting ever larger trials of the digital currency through a series of pilot programs.

The currency would give the central bank far greater visibility of how money circulates throughout the country.

J.P. Morgan said it doesn’t think there is much cause for concern in the short term, given the DICJ denial, but agreed that it could potentially be the end of the shrinking junket sector.

The Macau government has been widely praised for its handling of the crisis.

“Since gamblers would be able to use e-renminbi from his/her e-wallet to purchase chips, casinos wouldn’t have much, if any, reason to pay hefty commissions to junkets – currently approximately 44 percent of VIP gross gaming revenue.”

The pandemic has again thrown a spotlight on the dangers of relying on a single industry and a single tourism market for Macau’s economy and this time in a light that’s so dramatic it would be hard to ignore.

The government is expected to push further to diversify Macau’s economy. It’s also expected to seek concrete pledges from operators about non-gaming diversification as part of the concession renewal process.

Details of the retendering aren’t expected to be disclosed until late next year and the government has also said it doesn’t intend to delay the process, despite the short period of time for operators to prepare their submissions. The concessions expire in June 2022.

A year like no other for Asian gaming

At the conclusion of every year there are important industry events that need to be recapped, but there can be little doubt that even ten years, twenty years hence, 2020 will mark a dividing point in history between the pre-Covid and post-Covid eras. This will be true even if the malady itself, as most people now anticipate, is eliminated in the coming years by a variety of vaccines.

As everyone reading this article no doubt recalls, distant stories about a coronavirus spreading from Wuhan, China, grew more insistent throughout January and February, and by the spring it was no less than a global pandemic impacting every jurisdiction in the world, including the Asian and Pacific nations that we put our main focus on.

By the summer, it was also becoming clear that Covid-19’s heaviest impact was not falling upon China or even East Asia, where the crisis began, but on others such as the United States, where healthcare systems withholding coverage to large sections of their population, as well as other local customs and attitudes, made any sort of unified community response to the pandemic difficult if not impossible to implement.

Indeed, the Asia-Pacific included such countries as New Zealand and Taiwan, and even Macau, for that matter, where the direct toll of the coronavirus fell very lightly.

But no one could escape the massive indirect impacts such as the crippling of international transportation networks, the near elimination of cross-border tourism, and the heavy hand of policies related to social distancing and enhanced sanitary practices.

Although the recovery was uneven, by the second half of the year some casinos and other resorts were able to resume operations and even manage small profit margins on the basis of domestic tourism and pent up demand from patrons who had become weary of long periods of time stuck in their homes, isolated from their customary social activities.

One of the unexpected lessons of 2020 was that casinos and integrated resorts are not nearly as invulnerable and recession-proof as many may have formerly believed. The coronavirus pandemic possessed just the right formula to drive patrons away from the casino floors, the shopping malls, and all of the other forms of entertainment upon which the industry relies for its revenues. Even the most robust and well-managed casinos suffered serious setbacks in the spring.

But if in any cloud there is a silver lining, then it was surely the shot in the arm experienced by a variety of forms of online gaming. People stuck in their homes became captive audiences searching for entertainment that they could find on their computers or mobile devices. Many of these people turned to online gambling as their pastime of choice, and some firms proved well positioned to step into the vacuum.

A corollary to this development was that governments and gaming industry regulators were also encouraged to think more carefully about online gaming. Their responses have been various. In India, the explosion of local people using their mobile devices for betting resulted in several major state governments passing blanket bans on online wagering, while other jurisdictions too grappled with the question of whether to crack down on internet gambling, much of it directed from overseas bases, or to legalize it in some form and to collect public revenues from it.

One of the most striking of these transformations occurred in the Philippines, where PAGCOR is now beginning to license some of its land-based resorts to operate online divisions.

The debate over whether to ban, crack down on, blacklist, regulate, or promote online gaming has really only begun in 2020, and the answers will likely play out over a number of years, following different trajectories in different jurisdictions. It is easy to predict even now, however, that the Covid-19 pandemic and the events of this peculiar year will become important reference points in this debate for the foreseeable future.

People stuck in their homes became captive audiences searching for entertainment that they could find on their computers or mobile devices.

A final observation that should be made about this year in the history of the Asian gaming industry is that it highlighted the resilience and adaptation of many of the industry players.

Managers of gaming floors quickly rearranged their layouts to upgrade sanitation and to implement changing government guidelines on social distancing and other crowd limitations. Suppliers went back to their whiteboards to brainstorm new products that could allow contactless gaming or other protections for staff and patrons. Human resource managers made painful decisions about their revised staffing needs and they rapidly enforced new training protocols for those who remained. Executives who were more accustomed to talking face-to-face had to find new ways of communicating effectively while offering presentations on Zoom or other online meeting platforms.

In short, this was a year that challenged and forced changes in established business practices in the midst of disorienting days, weeks, and months. For those whose businesses survive the storm, new skills and new outlooks are sure to follow.

Confidence in local government

Jay Chun | Chairman and CEO, ParadiseEntertainment, founder of the Macau Gaming Equipment Manufacturers Association

The Macau Government is working hard on the new casino license process. including reviewing all aspects of the existing gaming laws and regulations, as the landscape of the gaming industry has greatly changed since the grant of the previous concession back in 2002.

Mr. Chun is confident that the Macau Government, led by the Chief Executive Mr. Ho Lat-seng will continue to implement the policy in pursuit of the stability of the city, which in turn would be vital to ongoing prosperity of Macau.

Macau is facing rising competition from jurisdictions such as Vietnam, Cambodia, the Philippines as well as Japan, which are generally considered to be newer gaming jurisdictions than Macau having a relatively diverse customer base.

Considering this, going forward, I expect that the Government would evaluate a gaming license scheme that aims to include attracting a new set of customers from a wider place of business and exploiting potential beyond gaming which works best for all the stakeholders involved.

Mr. Chun has full confidence that the Macau Government is equipped with the ability and the vision to consider the new license bidding process that is best for Macau, best of its stakeholders, and fits well into the Greater Bay Area Development Plan in the long term. As far as Paradise is concerned, since there are very few details out there for a full plan on what exactly the government is planning to do, the group shall carefully consider and evaluate this opportunity when the Government has announced the details. Having said that, since our mission is to become a world-leading gaming equipment supplier and our core focus in the past and in the future would continue to place emphasis on gaming technology, our primary focus would stay in the realm of gaming technology.

For years, the Macau Government has been making great efforts to label Macau as a World Center for Tourism and Leisure. Yet, the pandemic has uncovered her major weaknesses particularly as a city that is over-reliant on tourism, not just gaming. To effectively diversify Macau’s economy, Mr. Chun supports that Macau should gradually develop other economic sectors beyond tourism. Despite our mission to diversify, we should not ignore nor forsake our gaming market, as it still makes a significant contribution to our economic prosperity and will continue to play a major role in our future economic development. For Macau to diversify its economy, Mr. Chun supports that continual innovation in the marketplace is definitely required. In this regard, he thinks innovative technologies, including but not limited to AI and 5G could also improve the efficiencies of gaming businesses.

In recent years, the mass market segment has proved itself to have overtaken the VIP segment in terms of contribution to GGR and has become an important basis for the gaming industry’s sustainability.

This past history highlights that technology and innovation are indispensable to the life of the gaming market. Mr. Chun says that there is room for development of Electronic Table Games, particularly for LMG machines to capture this trend and welcomes to see policies from the government which can provide more incentives for the gaming manufacturers to invest on research and development on innovative gaming machines and products.

In the long run, this serves to attract more talent from high-tech backgrounds to come to Macau and to build it as the hub of gaming technology in the Greater Bay Area.

Longer-term focus comes to fore

Angel Sueiro | Chief operating officer, PH Resorts

This is the year that forced us to embrace uncertainty and a different understanding about how time perception has an influence on our behavior.

On one side we learnt to be efficient in a virtual communication environment. We applied the basic business principles but with an enhanced sense of urgency and continuously readjusted assumptions and execution decisions to be taken. Resilience became one of the main leadership needed skills.

On the other side came the realization that the business needs to focus on long-term sustainability. The dangers of just looking into your last quarter results.…it was a contrast between the constant daily urgencies and crisis and the clear realization that only a business with solid, durable and deep rooted fundamentals will survive.

2021 will show the first big steps to defeat the pandemic and in parallel signs of economic recovery (through big government stimulus). Anyway the risk of an economic slowdown is always there. Also, we should consider a slow change in demographics behavior due the increasing income gap between different social sectors. Technology will become even more important to identify these changes and the ability of the operators to adjust the product quickly (and accurately enough) will be even more important under this fast moving environment.

Zero-touch economy created

The pandemic has swept the world like no one could have imagined in the year of 2020. This global crisis has put many businesses to an abrupt halt in Q1 and forced companies to develop new business models for survival.

Working from home has created not only new ways of business interaction but also new demands for digital and virtual technologies. Although companies around the world first experienced a sudden slump when the lockdown was first in practice, it is surprising to see how fast people are adapting to the new situation and shifting from face-to-face interaction to online communication. This has created a new form of zero-touch economy, in which the integration of virtual technology and digital innovation will play an even more crucial part in defining a company’s sustainability and success. BBIN believes the digital zero-distance innovation will keep booming faster than ever and continues to offset the impact of the pandemic.

Asia, being the first region to battle with the COVID19 challenge, is now moving to a relatively stable stage of living with the new normal even though travel restrictions and social distancing protocols are still in practice. For the year of 2021, we expect that Asia’s gaming industry will continue to see the recovery of the domestic market, while the missing piece of the international market is still highly dependent on whether the borders will be opened in 2021. Moreover, as sports events are gradually back to the field, BBIN looks forward to seeing the sports fans rejoining these events and hopes that the sports betting market will bounce back soon. Finally, as the Philippines regulator Pagcor recently greenlighted casinos to offer online betting, it is worth observing if the attitude towards online bets is gradually changing under the financial pressure caused by the pandemic. Let’s keep a close eye and see if it is just a transitional policy or the first step of opening up the iGaming market.

The experience of living in lockdown with the socialdistancing protocols has changed how people communicate, interact, do business, literally every aspect of our lives. With the vaccine coming on the way, we are getting a step closer to recovery.

During this difficult time that we all need to face the challenge together, it also creates a moment for us to bond closer with our family, the community, and rethink about the balance between economic growth and sustainable development. We have seen many recent events in the industry, including new awards and other CSR programs trying to bring more awareness of sustainability and highlight more on community engagement. Likewise, BBIN has been working to achieve the goal of a balanced and sustainable future through TGB Charity’s nonprofit campaigns. The sudden blow from the pandemic also prompted BBIN to delve deeper into the relevant issues and engage more in these charitable activities. We believe changes bring growth, and all these endeavors will make the whole world different from what we had before the COVID19 pandemic. At this critical juncture, BBIN keeps the agility and adaptability of responding to the ever-changing situation and hopes to hit the road of steady and sustainable growth in the year 2021.

The year that tarnished Crown

David Green | Principal, NewPage Consulting

In terms of the most surprising event of 2020, I think Crown’s poor showing before the Bergin Inquiry qualifies.

Crown has enjoyed a monopoly in both Victoria and Western Australia, which owes more to politics and history than it does to competence and good practice governance. I expect Crown may face an extended suspension of its NSW casino licence, during which time it will be required to undertake major reform of its management and Board, and to distance itself further from James Packer. Whether there will be any flow on to Victoria and WA is currently uncertain; the regulatory and political inertia which has to date shielded Crown from the consequences of its own actions, and inactions, may limit the damage the company suffers in both jurisdictions.

Regarding 2021, the issues for me are the following. First, whether Macau will seek to retender its gaming concessions in 2022? In my view, it should not. Analysts are projecting a slow recovery of GGR post COVID-19, with some suggesting it may be 2023 before normalcy returns. Payback periods for new investments in both gaming and non-gaming assets are likely to be extended to such an extent that it may be difficult to attract the quantum of capital that the government expects to be committed by successful tenderers.

Analysts are projecting a slow recovery of GGR post COVID-19, with some suggesting it may be 2023 before normalcy returns.

Secondly, the next few months , encompassing the transition of the US administration from President Trump to President-elect Biden will be critical in determining the immediate future of Sino-US relations. Unless the temperature is dialled down, which presently seems unlikely, there must be a real risk that US operators with interests in Macau concessions will be at risk of being collateral damage. No overtly hostileaction would be required to effectively expropriate those companies’ gaming assets in Macau; the concessions could simply expire and not be granted anew as a result of the forthcoming tender process.

Finally, I expect there will be real impetus for Macau’s casinos to move to cashless gaming. This will be encouraged as a practical response to COVID-19, which has exposed risk associated with handling currency. It has additional benefits, particularly in regard to mitigation of AML risk, and the more effective denial of access to gaming products for persons who are barred from the casinos, or who wish to limit their gaming spend to a pre-determined amount in any given period.

Philippines positivity points to brighter future

David Lawrence | General manager, casino, Thunderbird

When we look back at 2020, regardless of business or geographical location, this has been a year of unprecedented disruption, whether personal or work related, to everyone’s way of life.

In hindsight the most surprising aspects of this pandemic is the speed at which everything changed and the duration of these changes. While this situation has allowed many of us to spend more time with our families from a business perspective many very difficult decisions have had to be made to stabilize operations.

Especially for the hospitality industry the restrictions on movement both locally and internationally had and continue to have a significant impact. While many restrictions remain in place and are only expected to ease slowly, we have seen a gradual increase in business volume and are aware that there is pent up demand in many areas that should benefit us moving forward. The pandemic has also made us explore other options within our operations that we would not normally have considered, time will tell which options we choose to pursue.

The Philippine people are renowned internationally for their resilience and positive outlook on life regardless of the circumstance, indeed in addition to the pandemic we also had to endure several typhoons during the year. This outlook will carry us forward as we see restrictions eased, aided at some point by vaccines. Prior to Covid-19 Philippine gaming was enjoying a boom with revenues up and investment in both existing and new gaming and IR projects being seen. While this boom may have been paused, we firmly believe that Philippine gaming prospects remain very good in the longer term and will be raising a socially distanced glass to 2021 and beyond at the end of December.

New norms and little luxuries

Danny Too | General manager, Cherry Interactive

Most notable / surprising events of 2020: What else but Covid-19:) The pandemic that brought the world to a standstill, making people evaluate their priorities in life. It is a time when wearing a mask is a “norm” and being able to fly without going through a quarantine is a “luxury”. Attending virtual gaming events and webinars seemed really “weird” and “interesting” at the same time.

There will be a lot of interesting new norms on the horizon and a time to make up for lost time of 2020 due to the pandemic. A year where you need to deliver as you will most probably be well-rested by the time we usher in Year 2021. Year 2021 will be a year where we will learn to cherish small little things that seemed insignificant prior to this ravaging Covid-19 pandemic.

Impatience for normality

Dennis Andreaci | Managing director, Andreaci Consulting

Very surprisingly, some very well managed small and mid-sized casinos have been able to focus on their local premium guests along with very reduced staffing and other costs (because most of the tables are closed and not needed). This small group of players has helped the casinos function as a business reasonably well.

What I’ve seen recently is that the public does have a lot of pent-up demand for doing things like traveling and I suspect that will be for casinos as well.

If you asked me this six months ago, I would have said I think people will be slow to re-adopt crowded activities. It looks like many people are growing impatient and are more willing to get back to what they like to do. So the key thing to look at is how fast the public is ready to return to their leisure activities.

I suspect we will see stages of surging. From almost no guests to a very quick jump in core players coming back quickly. Then the next stage might come some months later as we see a surge in general tourism.

There is nothing that can hold back the real premium and regular players once they are allowed back in easily. We see some of this already in Asia when and where restrictions are eased.

I think that a well-managed casino should have a lot of marketing programs ready to fire up at any time so they could get a jump on the competition as they see the players considering coming back. I would like to be in front of that and take future market share from my competitors.

Hopes high for Year of the Ox

Desmond Lam | Professor in Integrated Resortand Tourism Management and the Director of Accreditations at the Faculty of Business Administration, University of Macau.

It is interesting how fortune changes and predictions fail in the Year of the Rat. The year started with caution as COVID-19 outbreak began to wreak havoc in China.

By January 25, the first day of the Chinese New Year, the devastating power of the bats over the Rat had become clear. For Macau’s casinos, a 15-day shutdown was just the beginning of a long nightmare. Visitor numbers to Macau and casino gaming revenue plummeted as weeks passed. When good news came in August and September in the form of the resumption of the Individual Visitors Scheme, many rejoiced. But hopes were dashed when October’s gaming revenue and visitor numbers were much lower than expected. With December approaching, however, all figures seem to reflect an improving business trend.

As we approach the end of the Year of the Rat, there is greater optimism. Mainland Chinese cities are already in full recovery mode, despite pockets of coronavirus cases. There are positive takes from the past year. For one, Macau’s new government performed exceptionally well under pressure and putting measures in place swiftly while injecting confidence in the marketplace. Our residents, local businesses and concessionaires had also shown great resilience in the past year, working together to overcome their differences during such difficult times. Recovery is currently in sight, and that’s partly because everyone played their role. This will sell well to our prospective visitors in the coming months. I am thus hopeful as we approach the Year of the Ox and as vaccines become widely available.

With the pending renewal of Macau’s casino gaming concessionaires in 2022, many fundamental changes may occur by late 2021 and early 2022 as operators hail to the preferred “directions” of the government. Apart from the Macau government, local tourism and gaming executives are currently still contemplating how best to move forward. Many have hoped that the Year of the Ox will see a return of visitor arrival numbers and gross gaming revenue to pre-Rat level. Is it possible? Yes, I believe we will but at a fraction.

Adapting to Covid-19 challenges

Dominick Stenson | Casino manager, Queenco

The most notable event for me is the actual survival of many organizations given the unprecedented operating conditions of 2020, that’s of course when the doors were not closed completely.

Although many unfortunately did not survive, others, not just the mega corporations, adapted quickly and made the adjustments and strategic changes in order to stay afloat. Hats off to them! And here’s hoping the others can bounce back in 2021.

Regulatory shakeups likely in pipeline

Jamie Nettleton | Partner Addisons

It is not just COVID-19 and its effects for which 2020 will be remembered by the Australian gambling sector.

The event likely to have the most long-lasting impact is the NSW Casino Inquiry. Although a report is not due to be handed down by Commissioner Bergin until February 2021, evidence given during the hearings, as well as matters that have arisen in the course of submissions, have highlighted matters which any gambling licensee, whether based in Australia or overseas, should heed in conducting their business. Whether it be appropriate levels of corporate governance (including main board supervision), the necessity to have appropriate measures in place to detect and report money-laundering, or other matters, the NSW Casino Inquiry has considered a very broad range of issues (and in a very public manner).

It is also clear from the NSW Casino Inquiry that the gambling sector cannot operate in a vacuum. Reference has been made to the roles of ASIC (Australia’s corporate regulator), and AUSTRAC (Australia’s anti-money laundering/counter terrorism financing regulator), as well as the various gambling regulators, all of which have oversight on the business operations of Crown Resorts.

As one of the areas being reviewed in the course of the NSW Casino Inquiry is the manner in which casinos should be regulated, taking into account global best practice, the recommendations are awaited with interest, as well as the actions that will be implemented subsequently by the NSW regulator. It will also be of interest to determine what actions are taken by other regulators as a result.

Back to COVID

The pandemic had a material impact on Australian gambling operators, both land based and online. Both suffered the consequences of COVID immediately with gambling venues forced to close while the online betting operators needed to find different types of betting contingencies (such as esports) with traditional sporting events only taking place to a limited degree. By the end of 2020, the businesses of most Australian gambling operators have bounced back, save where social distancing remains in place, for example, in casinos. However, one trend which has emerged during the COVID period is digitalisation, with increasing efforts being made to the utilisation of technology to conduct gambling in a contact-free manner. I expect that 2021 will result in further steps towards cashless gambling, particularly in venues and in the operation of gaming machines.

2021 will also see increased consumer protection measures in place, ranging from the introduction of a national self-exclusion register for online betting to new verification/identification measures for players of gaming machines.

Expect more change in 2021!

Japan IR process needs to take decisive step forward

Fred Gushin | Managing director, Spectrum Gaming Group

The Macau gaming industry will face a slow but steady increase in both visitation and gross gaming revenues as it transitions to more of a destination market, catering to visitors to Macau primarily consisting of the mass and premium mass markets segments.

Government-imposed restrictions on travel for Chinese nationals will create repercussions throughout Asian gaming, including severely restricting the ability of junket operators outside Macau to function.

The New South Wales Gaming & Liquor Authority Crown Inquiry has raised serious and pervasive concerns relating to anti-money-laundering, casino due diligence, junket controls, corporate governance and overall casino compliance related to the Crown casinos in Melbourne and Perth, which will result an enhanced emphasis on casino compliance and AML issues throughout Australia and Asia and more robust governmental regulation of VIP play.

Efforts to authorize integrated resorts in Japan will continue, even as Japan is dealing with a change of government and a global pandemic. The government is expected to take affirmative efforts to advance the complex process surrounding the issuance of IR licenses; if it does not, it will risk further delays and the loss of interest in Japan by many of the major gaming companies.

“Emergency” content still in demand

Michael Maertz | Managing director APAC, Sportradar

It has been a really unique and indeed surprising year to say the least. When live sport ground to a halt earlier in the year, we lost 95 percent of our live sport feeds in a matter of days. That would have signaled logically some tough and challenging times for all in the sector.

At Sportradar, we were able to put out emergency content and products that kept our customers afloat and were well received by punters in the market. That was the surprise at how punters accepted the content, from E-Leagues, Table Tennis to Virtuals and Simulated Reality. This was a move away from the traditional “ sports as they shut down during the height of the pandemic, and as we see more and more leagues re-open, there is still a steady demand for much of the content we put out there originally as “emergency” content.

2021 is hoped to be the year of bouncing back from 2020 for most. I expect to see an increased focus on developing content for operators and punters that can be sustained and constant, no matter what. The focus at Sportradar will be to ensure the content that we have developed is kept going as much as possible as the demand is clearly there. Virtuals and Esports will be areas of greater emergence than ever before in that respect. Of course, with 2021 being the year of the re-scheduled European Football Championship, there will be an upsurge in interest especially in Asia as more and more live sport, with all its excitement, returns.

Virtuals and Esports will be areas of greater emergence than ever before in that respect.

As more and more live sports return, the key here is to ensure that we have products that are innovative in delivering what operators and punters want. Demand will resume if consumption has changed, and I think we have as a company met those challenges, and will continue to do so.

Looking for travel bubbles

Matt Ballesty | Executive general manager, gaming, SkyCity Entertainment

2020 was a year none of us will forget.

New Zealand and Australia continue to outperform the world with management of the pandemic, and while it’s likely a travel bubble between the two countries will be the first major change in border restrictions, we expect it will come with a number of restrictions.

The rollout of vaccines is a positive sign for the industry but it will be some time before we return to a normal environment, and in the meantime our priority at SkyCity is to remain open while keeping our team and our customers safe.

We have a lot to look forward to in the year ahead, we have invested in our core businesses, recently opened our stunning new Adelaide casino and our VIP rooms in Auckland look fantastic.

We can’t wait to welcome more customers to SkyCity in 2021!

Hard work to be rewarded in 2021

Peter Johns | Chief commercial officer, IDX Games

With 2021 fast approaching, it’s important to reflect on how challenging this year has been.

With all the trade shows cancelled and extensive travel bans enforced, it’s been almost impossible to show our customers the new product lines we’ve built this year. That said, interest from progressive casinos who see the benefits we offer has been gratefully immense. This has kept us uniquely busy, shipping trial units to a number of sites, or hosting Zoom meetings to remotely introduce our new product line.

COVID-19 has not only changed the way we all do business, but new restrictions have also led to some interesting product developments. Our X-Touch and X-Portal modules have been designed with hygiene and social distancing in mind. For instance, X-Touch replaces physical chips at the tables if required, and allows casinos to increase occupancy for each game with touchscreen tablet play. X-Portal can also be used to stream games to other online platforms. We aim to release a suite of licensed game products, with new exciting additions to the game of Baccarat, that will be beneficial for our X-Table customers in adding incremental value.

With 2021 marking the Chinese New Year of the Ox, I am reminded of how hardworking and methodical the Ox is known to be, and I believe that 2021 will be a year when hard work will be duly rewarded. We sincerely hope that this is true on a number of levels and wish all our customers and friends a better year ahead.

Vietnam growth to gain momentum

Tim Shepherd | Director, Fortuna Investments

Looking into 2021 for hidden gems / growth stories in land based - outside major VIP IR projects - there are two types of market best poised to recover and succeed.

Firstly those with domestic demand, either through local and foreign resident play and secondly those able to secure a travel bubble arrangement between source markets and destinations featuring gaming. Three markets stand out who fit these criteria: the Vietnam club market remains strong and is growing.

When the pandemic got going, many expats (largely Asian), involved in the manufacturing sector in Vietnam decided to stay and continued to fuel the gaming clubs in the larger cities. The clubs were closed only for a few weeks as Vietnam successfully dealt with virus contagion. Furthermore as international manufacturers look to reduce their reliance on China as a sole supplier, Vietnam has become a focus for yet more investors from across the globe but in particular from South Korea and Japan. Throughout 2020 they have been able to bring their experts into the country on special business visas, to support new and growing investments, despite a prohibition generally for all other non resident/non citizens. Continued growth of revenue in this sector, albeit mass and premium not VIP, can be expected into 2021 and this may well flow over to casinos such as Corona and when it opens Hoiana.

Nepal increasing activity long term play (increasing presence of Chinese/Indians).

Although the virus is not under control in India, a vaccine in 2021 should see the continued emergence of Indian neighbour Nepal and an increasing number of casinos on the long border between the two countries. India’s continued love/hate relationship with gaming seems destined to continue, but Nepal continues to develop supply.

Kathmandu casinos were buoyant before the virus and will quickly be again soon after.

Superpowers India and China have long sought Nepal’s natural resources for vast hydropower projects and are in a commercial war to win over the Government, leading to a huge influx of businessmen, lobbyists and entrepreneurs. Kathmandu casinos were buoyant before the virus and will quickly be again soon after. Nepal is not a destination under China’s gaze as a gaming destination and this may help revenue growth in Kathmandu.

Bubble markets: Although these are still largely under discussion around the region, specific talks have involved South Korea and CNMI as well as Vietnam and China, which will open free passage between both countries to virus-free visitors starved of entertainment. Look for these bubbles to drive gaming revenue and re-investment by operators.

Startling stock reality gap

Sudhir Kale | Founder, Gameplan Consultants

The most surprising phenomenon in 2020 for me was the elevated stock prices for casino companies. Overall, the stock market looks increasingly divorced from economic reality and nowhere is this phenomenon more pronounced than in the case of casino stocks.

After being badly hammered in March-April 2020, casino stocks have shown an amazing comeback, despite the industry being beset by severe structural problems such as crippling Chinese restrictions on the outflow of the renminbi, increased government vigilance of Chinese citizens gambling abroad, and blacklisting of casino properties abroad. The top casino companies generate bulk of their revenues from China-facing properties. Added government restrictions on Chinese players will continue to negatively impact casino operators’ performance in 2021 and beyond.

Besides Chinese interference, we see a depressed global economic environment and a slower-than-expected recovery in the travel sector. Amid such negative developments, the online gaming industry in countries such as Australia has shown remarkable growth of 140 percent in 2020. The bulk of punters who got introduced to online gambling during the pandemic will continue to gamble online in 2021. This development will cut into the casino gambling wallets of many customers, further delaying recovery in the casino sector.

Customer loyalty has taken a huge hit during the pandemic.

As I have written elsewhere, customer loyalty has taken a huge hit during the pandemic. Casino companies will have to work twice as hard toward customer retention. Ingenious loyalty programs will have to be designed which go beyond the traditional “earn and burn” model. Overall, the global casino industry will face a less than munificent climate not only in 2021 but maybe 2022 and beyond.

China neighbors seen as first port of 2021 call

Prof. Wolfgang Arlt | Founder, ChinaOutbound TourismResearch Institute

At the end of this annus horribilis, after so much hardship and so much obedience demonstrated by societies in lockdown around the world, we are all entitled to a nice Christmas present and the prospect of a better tomorrow.

Fortunately, it seems that we will actually receive such a present in the form of several functioning and affordable vaccines becoming available to end the global terror regime of a tiny virus called Sars-CoV-2. Celebrations (in small groups, keeping distance, no kisses for persons not belonging to your household under the mistletoe!) appear appropriate even for those who do not rejoice about the story of a baby born in Palestine many years ago.

China will end the year as the number one outbound tourism source market, even if this title in 2020 is more akin to “Tallest Dwarf on Earth”. Comparing the period of April to December 2020 with the same period in 2019, less than four million border crossings from Mainland China will have happened, compared to 127 million last year. More than half of the trips had Macau as their destination, meaning that Macau received more Chinese visitors than the rest of the world together during that period. Who would have thought five years ago – and indeed even one year ago – that this could ever happen?

China will in 2021 again be the top international tourism source market and gaming will still be an important pastime for many of the Chinese travellers. Neighbouring countries and regions will be the first destinations receiving higher numbers of tourists from China again. However, it will take another year before the number of border crossings surpasses the level of 2019. For gaming turnover that might even take a few years longer thanks to a combination of growing patriotism and digitalisation causing a decrease of business and MICE travel.