Is Betting on Gambling Still the Right Bet?
Over here in Metro Manila, the construction of new hotels with in-built casinos are not at all abating. New areas devoted to attracting high-rollers in the names of Entertainment City and City of Dreams have now finished phase 1 of construction and continue to aggressively expand into open lands next to Manila Bay (at least part of which are reclaimed from the sea). Despite the author's frequent travels within Manila during his time of residence, this development (and the scale and pace of construction) is certainly not previously seen and can be considered unprecedented.
What is scary about Manila's new-found enthusiasm for casinos is that it is happening against the backdrop of a quickly cooling market. While the Filipino national government (as well as others like Singapore) has gone on an intentional effort to grab a bigger share of the Asian gambling market dominated by Macau, stats coming out of Macau itself is showing that the popularity of casinos there is no longer comparable to the red-hot days of the past few years. Indeed, where the city's economy grew by double-digits on the back of the gambling boom before, it is absolutely no longer the case.
Much can be blamed on the massive crackdown on non-private wealth by the Chinese government. The anti-corruption campaign carried out by Beijing has prevented many officials from using official funds for private consumption purposes. Not only has this stemmed decrease in mainland officials putting up government money in casinos abroad, it also indirectly (but nonetheless dramatically) affected the incomes of many private-sector Chinese businessmen, who rely on trigger-happy spending habits of the said officials to keep their own pockets lined with enough cash to gamble.
Yet, walking down the aisles of the casinos at City of Dreams, it is obvious that the developers here in Philippines have not gotten the message. The casinos are ubiquitously bilingual in Chinese and English, with prominent signage of Chinese also found on various betting machines, notice boards and instructions for visitors, as well as the selection of restaurants on the premises. Given that the Chinese literacy of the Chinese-Filipino population is largely questionable, the main target clientele of the casinos would not be the Chinese-Filipinos, despite the large amount of wealth they often hold.
In a previous post, the author noted the rocky political relations between China and Philippines, pointing out that the strains there would deter visits by potential Chinese betters. Not only do those strains still hold true, they have also become stronger and more entrenched in the recent months with China's aggressive actions in the South China Sea territorial disputes and the Philippine government's firm opposition. While hostility toward China is not very evident among the common people in the Philippines, it is hard to imagine Chinese visitors deliberately testing the waters just for gambling.
Anecdotal (i.e. first-hand observation) evidence show that Chinese visitors here in Manila is still prominent, but limited to those strictly on business and not holidays. In the City of Dreams casino, for instance, Chinese visitors are completely overshadowed by local Filipino visitors in presence and sheer numbers. While the author has no way of knowing how much these local visitors spend on gambling vis-a-vis their Chinese counterparts, one thing for sure is that for the newly opened casinos to heavily depend on the incoming of Chinese masses would be the nonviable business model.
Still, the local developers should remain optimistic. As the author's friend mentioned, the Philippines still have much potential, from a truly general economic sense. The pace of building is picking up not exclusively for entertainment venues like hotels and casinos but also restaurants and shops catering to a more affluent crowd. Private businesses are not stupid, they know that the pie is growing bigger as more people move into the middle class and have higher disposable income that can be devoted to more expensive leisure activities. And as more consumption occurs, even more people can be brought into the middle class.
The virtuous cycle mentioned above is what should give confidence to the new casinos to come. Yes, the Chinese gamble quite a bit compared to other peoples, but that is not purely because they have the money to do so. Instead, gambling for them is a lifestyle-related leisure that they are willing to spend a significant chunk of income, unlike others (including wealthier whites). The affluent Filipinos with newly acquired wealth can be trained to become the same. For this, greater and more frequent exposure to the comforting environment of casinos is a must. This in itself is good enough reason to continuing casino constructions.
What is scary about Manila's new-found enthusiasm for casinos is that it is happening against the backdrop of a quickly cooling market. While the Filipino national government (as well as others like Singapore) has gone on an intentional effort to grab a bigger share of the Asian gambling market dominated by Macau, stats coming out of Macau itself is showing that the popularity of casinos there is no longer comparable to the red-hot days of the past few years. Indeed, where the city's economy grew by double-digits on the back of the gambling boom before, it is absolutely no longer the case.
Much can be blamed on the massive crackdown on non-private wealth by the Chinese government. The anti-corruption campaign carried out by Beijing has prevented many officials from using official funds for private consumption purposes. Not only has this stemmed decrease in mainland officials putting up government money in casinos abroad, it also indirectly (but nonetheless dramatically) affected the incomes of many private-sector Chinese businessmen, who rely on trigger-happy spending habits of the said officials to keep their own pockets lined with enough cash to gamble.
Yet, walking down the aisles of the casinos at City of Dreams, it is obvious that the developers here in Philippines have not gotten the message. The casinos are ubiquitously bilingual in Chinese and English, with prominent signage of Chinese also found on various betting machines, notice boards and instructions for visitors, as well as the selection of restaurants on the premises. Given that the Chinese literacy of the Chinese-Filipino population is largely questionable, the main target clientele of the casinos would not be the Chinese-Filipinos, despite the large amount of wealth they often hold.
In a previous post, the author noted the rocky political relations between China and Philippines, pointing out that the strains there would deter visits by potential Chinese betters. Not only do those strains still hold true, they have also become stronger and more entrenched in the recent months with China's aggressive actions in the South China Sea territorial disputes and the Philippine government's firm opposition. While hostility toward China is not very evident among the common people in the Philippines, it is hard to imagine Chinese visitors deliberately testing the waters just for gambling.
Anecdotal (i.e. first-hand observation) evidence show that Chinese visitors here in Manila is still prominent, but limited to those strictly on business and not holidays. In the City of Dreams casino, for instance, Chinese visitors are completely overshadowed by local Filipino visitors in presence and sheer numbers. While the author has no way of knowing how much these local visitors spend on gambling vis-a-vis their Chinese counterparts, one thing for sure is that for the newly opened casinos to heavily depend on the incoming of Chinese masses would be the nonviable business model.
Still, the local developers should remain optimistic. As the author's friend mentioned, the Philippines still have much potential, from a truly general economic sense. The pace of building is picking up not exclusively for entertainment venues like hotels and casinos but also restaurants and shops catering to a more affluent crowd. Private businesses are not stupid, they know that the pie is growing bigger as more people move into the middle class and have higher disposable income that can be devoted to more expensive leisure activities. And as more consumption occurs, even more people can be brought into the middle class.
The virtuous cycle mentioned above is what should give confidence to the new casinos to come. Yes, the Chinese gamble quite a bit compared to other peoples, but that is not purely because they have the money to do so. Instead, gambling for them is a lifestyle-related leisure that they are willing to spend a significant chunk of income, unlike others (including wealthier whites). The affluent Filipinos with newly acquired wealth can be trained to become the same. For this, greater and more frequent exposure to the comforting environment of casinos is a must. This in itself is good enough reason to continuing casino constructions.
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