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Asia Most Likely to Compete With US in 2014

Posted on December 9th, 2010

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Asian and Australian gambling has become a fast growing industry. A report from PricewaterhouseCoopers LLP that was released Tuesday predicts that Asian plus Australian gambling revenues in the year 2014 will be at $62.9 billion. Meaning that these markets will triple in their revenue as compared to 2009 when they only had a $21.8 billion combined revenue. According to the report, Macau has fastest growing revenue. Macau’s revenue is expected to grow to $45.1 billion in 2014, having a rate of growth of 24.7%. Macau’s’ revenues next year are expected to grow to $28.3 billion then $34.2 billion the year after and then $39.9 billion in the year 2013. United States gambling revenue for 2009 was $57.2 billion, more than twice that of the Asian and Australian markets.

However the US gambling market is exhibiting slow growth. PricewaterhouseCoopers projects that American Indian casinos will only grow by 2.7% per year so by 2014 their revenues will have grown from $26.5 billion to only $30.3 billion. Combine this with commercial gambling in the U.S. which is expected to grow to $38 billion in 2014; PricewaterhouseCoopers expects U.S. revenues to rise up to $68.3 billion by 2014. Compared to the Asia Pacific, the US market will still have larger revenue but the former will be the faster growing region rising to $62.9 billion in 2014 from $21.8 billion in 2009, with a 23.6% rate of growth. It seems that the gambling industries progress is shifting from the west to the east. Two of the world’s largest gambling companies, Las Vegas Sands and Wynn Resorts have already started to make more money in Macau than in the US. This shift in revenue growth according to the report is attributable to three things.

First is the economic growth of the region which prompted the emergence of a prosperous middle class. Asian countries have steadily grown and are starting to become competitive with western countries when it comes to economic power. Take china, for example, with its vast and continuously growing economy.
Second is the deep attachment to gambling many societies have in the region. Gambling is part of the Asian culture. Even in the western countries it is evident that Asians are a huge market for casinos. To many Asians, most especially the Chinese, gambling is a part of daily life. It is not uncommon to see family members gambling with each other. This culture steadily fuels the gambling industry in this region. Contrast this to western culture where gambling is considered a vice and children are taught to avoid it.

And third is the growing opportunity to participate in casino gaming. New centers are constantly being opened to the public. The report shows that opening new centers for gambling has dramatic impacts on spending. Prime examples are Singapore’s rise to a revenue of $8 billion in 2014 from a standard start in 2010. This phenomenon is evident outside the pacific as well. Spain’s Gran Scala project is now expected to finish in 2013 and its completion will dramatically expand the market in the country resulting in a Compounded Annual Growth Rate (CAGR) of 70.7% for five years. Likewise new casino openings in Chile will cause a 39.7% increase in the market in a single year.

Part of the report concludes that throughout the world gambling industry, major changes will occur. They are predicting a large shift in gambling from the US to the Asia Pacific. The study also stated that there is now an increased demand and rising consumer expectations which force gaming operators to come up with new ways to meet the needs of the consumers and differentiate themselves from their competitors. PricewaterhouseCoopers predicts an increase in revenues for online gambling as a result of consumer demand for cross-border gaming. However there seems to be existing and predicted regulation problems that will arise from this. By 2014 Asia pacific is expected to hold 41% of the casino gaming market while US will still be higher by 2% with 43% of the market. The other players will be Canada with 3%and Europe, Middle East and Africa with 13%.