Asia in review: 2024 a year of change

Macau will have a new Chief Executive before the end of the year, with former president of the Court of Final Appeal, Sam Hou Fong, recently confirmed as replacing Ho Iat Seng, who is standing aside due to ill health. Mr. Ho has not been idle in his final few months, however. His administration introduced a new Law on Illegal Gambling Activities which came into effect on October 1st. The law is a continuation of Macau’s process of reinvention as it pivots away from the junket market towards more profitable mass and premium mass segments.

The new law aims to achieve three things: better definition of illegal gambling, stiffer penalties for those involved and new powers for the authorities to pursue criminal investigations. It also introduces two new criminal offenses: ‘illegal online gambling’ and ‘operation of illegal foreign exchange for gambling’.

The definition of online gambling or online betting now includes:

• Games of chance and mutual betting;
• Games played or wagered remotely;
• Use of electronic, computer, telematic, or interactive systems or any other means, regardless of the servers and devices being located in Macau.

Side betting, a focus of Macau’s most notorious junket trial, is outlawed as are Illegal mutual betting and illegal lotteries. Illegal money exchangers were prevalent around Macau’s casinos and the authorities have now criminalized illegal foreign exchange for gambling.

Tough new criminal sanctions have been introduced with prison sentences of up to eight years for those collaborating in illegal online gambling, and up to three years for side betting. Those operating illegal lotteries or trading in counterfeit lottery tickets face large fines or up to three years in prison and illegal foreign exchange for gambling offenses carry the potential for five-year terms.

As well as individuals, corporations and other legal entities can now be subject to criminal sanctions. Legal entities can face fines of up to MOP18 million (US$2.25 million) and judicial winding up. Their officers can also be fined if they are found to have committed offences.

In the wider market, Macau continues to grow with GGR in October 2024 above 75 percent of pre-pandemic levels despite junkets being a thing of the past. The first ten months of 2024 saw GGR reach US$23.7bn and latest government forecasts are for growth to continue to US$29.7bn in 2025. Longer term, the new Chief Executive, with his closer ties to Beijing, is likely to see the special administrative region align more closely with mainland China.

POGO no more

One of the biggest developments in the region took place in the Philippines where President Ferdinand Marcos announced a complete ban on offshore gaming operations, or POGOs. The ban was announced in July and backed up by the signing of executive order #74 in November. This ordered the immediate shuttering of offshore gaming operations within the country.

The ramifications of the action have been felt both domestically and further afield. Philippine authorities started downgrading the visas of thousands of POGO employees sparking a mass exodus that has continued since August. POGOs had been regulated by the Philippine government’s PAGCOR since 2016 and cater for a predominantly Chinese clientele. The sector employed an estimated 20,000 people and contributed US$ billions to the local economy. However, despite regulator PAGCOR opposing prohibition, Ramos judged that the economic hit was justified amid reports of the scheme being used to cover up serious illegal activities, including human trafficking, tax evasion, money laundering and cyber scams.

A ban on offshore gaming could help the Philippines exit the “grey list” of jurisdictions at risk for money laundering. The country has been on the list, compiled by the Financial Action Task Force, since 2021. Whilst offshore operations will be illegal in Philippines, the is unlikely to be the end of the organizations concerned. Instability in the offshore gambling market will compel operators to navigate a complex web of regulatory challenges and legal risks, which will ultimately influence their relocation decisions. Those operators seeking to legitimize their businesses under a new regulatory framework may look to more mature European jurisdictions where offshore gaming licenses are well-established. Others may choose to go down a very different route.

A recent study by James Porteous, Head of Research for the International Federation of Horseracing Authorities (IFHA) Council on Anti-Illegal Betting and Related Crime, suggests illegal gambling operators will be displaced to more welcoming markets leading to Thailand’s illegal betting crime model being exported to new regions.

Porteous warns that some of these operators will migrate to jurisdictions where they already have infrastructure or connections. Past industry upheavals saw the proliferation of POGO-like illegal betting operations in countries like Laos, Cambodia, and Myanmar. These regions have since become hotspots for cyber scams and organized crime syndicates, continuing to operate globally with minimal scrutiny.

Although ASEAN countries are showing some degree of coordination in combating these operations, particularly under pressure from China, the challenge remains daunting. The situation is exacerbated by endemic corruption, political instability, and weak legal frameworks in many of these countries.

While the offshore gaming scheme looks to have reached the end of the road, domestic online gaming operations – referred to as eGames – enjoyed explosive growth in 2024. This helped drive the country’s gaming revenues higher, despite a subdued land-based sector. Data released in November showed overall revenue hit PHP94.61bn (US$1.61bn) in Q3, despite land-based GGR falling two percent year-on-year. EGaming revenue accounted for PHP35.71bn (US$0.61bn), a rise of 465 percent year-on-year, and is expected to reach a target PHP100bn by the end of 2024.

Another area of interest will likely be free-to-play and social casino games neither of which are impacted by the POGO ban.

Although not strictly an Asian market, Australia has long been linked to Asian bettors and syndicates. All that changed with the Royal Commission report into the operations of Crown Casinos in Melbourne and Perth in 2021 and the last few years have seen the industry trying to reinvent itself against some severe financial and operational headwinds. A US$8.9bn acquisition of Crown by asset manager Blackstone and subsequent cash injections shored up finances but it is not yet out of the regulatory woods.

Crown rival Star Entertainment Group is itself in such dire financial shape as to risk insolvency. In mid-2024 the company called in former Crown savior Steve McCann to work his magic. McCann engineered the deal with Blackstone and, with their support, won back its casino licenses in Sydney and Melbourne. He has ruled out a similar fire sale at Star and, in any event, profitability for either operator remains a long way off.

Elsewhere Australian regulators lead the way once again in enforcement actions with close to US$55 million in fines across the first ten months of 2024.

Emerging surprises

Whilst countries like Indonesia still look a long way from legalizing their gaming sector, elsewhere it has been a year for emerging markets, with both Thailand and the UAE attracting the attention of leading operators worldwide.

Thailand’s draft Integrated Resort Act survived a change of prime minister and will be presented to the cabinet for consideration before the end of the year. Deputy Finance Minister Julapun Amornvivat announced the development and also revealed that the draft act gained 80+ percent support in a recent public hearing. The proposal has the support of former prime minister Thaksin Shinawatra, father of the new prime minister. He shared his vision of integrated resorts forming part of a wider engagement with private investors to fund much needed infrastructure and technology projects.

Such high-level support does not mean the Act is guaranteed an easy ride. Some influential figures in Thailand’s coalition government have taken a stand against it if not on principle, then at least on the details. However, assuming these hurdles can be overcome, there are high hopes for the potential of the Thai market. Latest reports from Citigroup estimates that Thailand’s GGR could surpass that of Singapore (although Singapore may be fighting back with the announcement of a US$5bn expansion of waterfront property Resorts World Sentosa) to reach a staggering US$9.1bn once the market is fully developed. This would place Thailand behind only Macau and Las Vegas in the global rankings.

There are still discussions on the levels of Thai ownership with recommendations ranging between 30 and 51 percent. The number of licenses to operate IRs is still uncertain although projected to fall in a range from three to seven. Complexes are likely to be strategically placed in popular tourist destinations such as Phuket, Chiang Mai and Pattaya, rather than just in Bangkok. License duration is clearer at 30 years, renewable in 10-year increments, with a license fee set at THB5 billion (US$148 million) and an annual fee of THB1 billion (US$30 million). For private investors, the draft law stipulates a minimum registered capital of THB10 billion (cUS$300 million).

Casino floors would take up no more than 10 percent of total resort space with an emphasis on non-gaming attractions like amusement parks, hotels and concert arenas.

A casino complex in Bangkok would require an investment of up to THB100bn (US$2.94bn) with properties outside the capital needing half of that. Thaksin sees an opportunity for Thai nationals to benefit during construction and operation with the creation of a large number of highly skilled jobs.

The rewards could also be substantial with a 2023 study suggesting that the integration of casinos could increase tourism revenue by at least THB408bn in the first year alone.

The plan also includes the regulation of online gambling which according to estimates is currently worth THB170bn per year in GGR. Much of the domestic market crosses the border to casinos in Cambodia, Vietnam, Myanmar and Laos. Others willingly patronize the black market so there is rich potential simply by keeping gamblers at home. Thaksin supports a 30 percent tax rate on iGaming, with revenue earmarked for education.

Questions still remain over what the regulatory regime will look like but despite the uncertainty, global operators are circling. Las Vegas Sands Corporation and MGM Resorts have both publicly expressed interest. Rob Goldstein, Sands CEO has called Thailand “a very, very exciting market in a lot of levels” and pointing to the size of population, accessibility and strong tourist market. MGM’s Bill Hornbuckle has also been bullish.

Despite the potential, supporters of Thai casinos face an uphill battle, no matter the position of the prime minister – or her father. There is however a realistic prospect that Thailand could open its first integrated resort before MGM’s Japan development in Osaka.

Five thousand kilometers west of Thailand is another market that looks set to emerge with a bang in the next 12-24 months. The United Arab Emirates has taken decisive steps to move ahead with casino legislation, setting up the General Commercial Gaming Regulatory Authority (GCGRA). The body is led by chair Jim Murren, former MGM Resorts chief executive, and chief executive Kevin Mullally whose experience includes a spell leading the Missouri Gaming Commission and acting as legal counsel at GLI.

The UAE will no doubt coordinate the location of integrated resorts, but the front runners are Ras Al Khaimah and Abu Dhabi. RAK’s plan will see Wynn Resorts pour over US$5bn into the Al Marjan Island resort which is set to open in early 2024. This 24-floor, 1500-room complex will have just four percent of its space dedicated to casino gaming but will generate gross gaming revenue in the range of US$1bn to US $1.67bn, according to company forecasts.

Wynn, which secured the UAE’s first gaming license in October ’24, estimates the total UAE market will be worth between US$3bn and US$5bn and it expects to pay a blended tax rate of 10 – 12 percent of GGR. It has not confirmed rates for specific products, but they are likely to be set at 25 percent of GGR for slots and 18 percent for tables with an eight percent rate for VIP players.

Rivals MGM has also been active in the region and is already in the process of developing a resort which will carry its Bellagio brand in Dubai. The planned property will not open with casino space but there are several sections which could be reproposed should the largest Emirate decide to go down the route of licensing gambling. MGM recently applied for a gaming license in Abu Dhabi.

The UAE’s Emirati Muslims may be seen at the tables in London but gambling at home is likely to be a step too far. Neither is it expected that Chinese gamblers will make up a significant component of the customer base. However, casinos in the region are not likely to struggle for patrons. Wynn’s investor presentations set out three player segments with ‘international VVIP’ at its core. Comprising ultra high-net-worth international customers, Wynn expects this group will contribute 37 percent of GGR.

Around 75 percent of the world’s population is within an eight-hour flight of Wynn Al-Marjan Island, the company said. It predicts that international tourism will make up 29 percent of the $1.33bn GGR projected total. The final 34 percent will come from domestic visitors. The UAE is an untapped market for integrated resorts, with a potential player base of nine million non-Emirati residents. And it’s a “magnet” for high-net-worth individuals Wynn said. More than 6,700 millionaires are expected to relocate to the UAE in 2024 alone.

Looking towards 2025, it is clear that there are both political, economic and demographic variables which will impact growth in the sector. Developments in the UAE would seem to widen the total addressable market, whereas plans elsewhere could simply displace GGR from one market to another. Either way, it will always be interesting.