Sheldon Adelson, the founder of Las Vegas Sands, has long been a significant figure in the Asian gaming industry. In Macau, he predicted that players would favor Sands Macao and the Venetian, which was built on landfill. He also believed Singapore would support the opulent Marina Bay Sands, complete with the world's largest rooftop infinity pool, towering 200 meters above the ground. However, doubts are now emerging about his 2007 claim that Asia could accommodate 'probably room for 10 Las Vegases.'
With distressed integrated resorts scattered from Incheon to Australia, the once-popular expectation of 'build it and they will come' is faltering. In the first quarter of this year, gaming revenue in the Philippines dropped by 16%, and gaming properties are struggling to attract buyers. In Japan, the world's third-largest economy, only one qualified bidder emerged for three integrated resort licenses in 2022, despite being a burgeoning tourist destination before and after Covid. Surprisingly, even in Macau, where gross gaming revenue tripled that of Las Vegas last year, five out of six concessionaires reported revenue and EBITDA figures below their 2019 levels.
'There is definitely a glut of casinos throughout Asia,' said Paul Steelman, CEO of Steelman Partners. 'Gaming is now available to much of the population across the region.'
The situation is complex, as John DeCree, head of institutional investor research at CBRE Capital Advisors, offered a different perspective. 'I’m not sure if a supply glut is the right term, but there are markets and projects that face challenges in gaining traction, and high-ROI opportunities are becoming scarcer.'
First quarter EBITDA for Okada Manila tumbled by $15.9 million, reflected across other casino resorts in the Philippine capital’s Entertainment City.
In a May 2019 report co-authored by DeCree while at Union Gaming, which was acquired by CBRE, an Asia gaming glut was forecast. That report noted over $65 billion in gaming projects set to debut by 2025, split evenly among Macau, Japan, and the rest of Asia.
'Given the scale of the pipeline relative to the EBITDA needed to support it, we believe – for the first time in Asia – that the amount of new supply is simply too high for the short time frame we're dealing with,' DeCree and Macau-based analyst Grant Govertsen noted. Their projections expected regional EBITDA would need to hit $27.7 billion—more than double the 2018 figure—to validate proposed properties outside of Japan. They estimated the appropriate capex for Japan would be below $5.5 billion.
The pandemic brought some relief from supply concerns, according to DeCree. 'Our biggest worry in 2019 was not just the size of the pipeline but the short window for which the supply was expected to come online.'
Since 2019, an estimated $21 billion has been invested in Asian land-based gaming, which is about half of Union's projected $42.9 billion. However, gaming EBITDA for the region remained relatively stagnant, with $13.6 billion in 2018 and projected at $13.7 billion by 2025. This investment yielded a mere $100 million increase in EBITDA, or a meager 0.7% with an ROI of just 0.5%. DeCree stressed that numerous projects failing to meet expectations validate the concerns raised in 2019 about oversupply.
Nikau Design Group's managing director, Nicola Greenaway, introduced another viewpoint: 'Referring to it as a supply glut might be too simplistic. Asia's gaming market is continuing to expand, but especially in critical hubs like Macau and various Southeast Asian regions, the supply is increasingly out of sync with demand. The decline in VIP gaming and the steady shift to digital channels have left sections of the land-based sector underutilized. The industry is no longer in growth mode; it is recalibrating, and in this process of recalibration, instances of oversupply are becoming more prominent.'
Vitaly Umansky, a senior analyst at Seaport Research Partners, disagreed with the oversupply label. 'I don’t think there’s a glut; rather, there are poorly managed and overbuilt assets for certain markets. However, Asia remains relatively underpenetrated compared to other gaming sectors. Take Korea's foreigner-only casinos—there are probably too many. The Philippines may also be oversupplied, especially with Westside City set to open, while Singapore appears undersupplied.'
Niall Murray, chairman of Murray International Group, explained that the issues in Asia Pacific are often not due to an oversupply. 'The struggles generally stem from investments and developments in gaming and non-gaming offerings that cannot meet the needs of current customers from primary source markets, focusing too heavily on junket and VIP customers who have become less prevalent.'
Andy Choy, a veteran gaming executive, expressed similar concerns about the market mismatch. He believes that focusing on the high-end gambling segment has created problems for the wider gaming landscape. 'Essentially, most properties are targeting the same narrow market segment using similar two-pronged strategies—luxury amenities and commission payments to sales agents.' He emphasized that the industry must pivot away from a narrow luxury focus to foster genuine innovation.
Choy also calculated that there is a substantial underserved mid-market segment in Asia. He noted, 'Combining the total annual visitors to Macau and Singapore yields around 60 million people annually, which is about 1.5 times the total number of visitors to Las Vegas. Furthermore, the core market for these places in China is roughly five times larger than that of Las Vegas, suggesting demand for casinos in these regions may be underrepresented by more than double.'
Changes in Macau’s Sands Cotai Central, which was converted to Londoner, resulted in a reduction of more than 1,500 keys. Given the trend towards 'premiumisation,' the mass market business in Macau is substantially underperforming. The detrimental impact of the pandemic was severe, with VIP gross gaming revenue plummeting from $16.8 billion in 2019 to $8.4 billion last year, coupled with a sluggish economy in mainland China. Meanwhile, concessionaires are dealing with a combined $13.6 billion investment requirement as per the 2022 gaming concession contracts.
Greenaway further explained the challenges: 'The project scale, timing, and demand do not align. Many developments were based on overly optimistic expectations—such as the viability of VIP gaming and a rapid recovery in tourism—that haven't materialized fully. Those factors, along with execution gaps and unforeseen external shocks, are straining performance. Ultimately, this cycle is imposing stricter discipline on the industry. Future developments will likely need to be more measured and responsive to actual demand, becoming smarter about how they expand and adapt.'
Certain integrated resorts like Inspire in Incheon, Hoiana in Vietnam, and Queen’s Wharf in Brisbane have faced serious struggles. These resorts date back to the early 2010s, a time when demand for gaming in Asia appeared boundless. At that time, there was considerable apprehension among US operators about being outpaced by rivals like Sands, Wynn, and MGM in Macau, particularly as junkets began to shift interest to new locations due to increased scrutiny from Beijing.
In the present, these three ventures have languished under new ownership and continue to grapple with serious challenges related to their substantial investments.
In March 2016, Mohegan Gaming received approval for the $1.6 billion Inspire project near Seoul's Incheon International Airport, making it one of the few viable locations for obtaining gaming licenses in Asia at the time. However, Inspire will have to rely solely on foreign tourists, making it difficult to attract enough patrons due to competition from other foreigner-only casinos in the country. Steelman noted that large integrated resorts require a vibrant mix of tourists and local patrons to flourish, making it a challenge for Inspire to operate effectively.
Umansky emphasized the difficulties created by a reliance on air travel for patrons: 'If your only customer base requires a flight to reach you, it complicates the business immensely.' Still, there are strategic benefits of an airport location.
Andrew Tottenham of Tottenham & Co presented a counterpoint: 'Foreigner-only casinos are typically not effective unless there is an established tourism infrastructure to support traveling tourists.' He argues that while Seoul has such appealing infrastructure, Incheon lacks this necessary infrastructure.
In February last year, Mohegan lost control of Inspire after defaults on a $275 million loan led Bain Capital to take over the resort. Observers believe Bain aims to sell Inspire, and they have begun making management changes, such as hiring Steve Wolstenholme as chief casino officer.
Hoiana, where Wolstenholme previously served as president and CEO, also aims to capture the foreigner-only market. Developed by Suncity, which aimed to cater to its high-roller clients, Hoiana was forced to recalibrate its business strategy when Suncity chairman Alvin Chau was arrested in late 2021. The original company's stake was sold to Chow Tai Fook Enterprises, a private entity linked to the Cheng family, which is known for its jewelry chain and past investments in Macau.
The Queen's Wharf Brisbane project has gone through substantial changes, with Chow Tai Fook Enterprises increasing their stake from 25% to 50%, partnering with Far East Consortium after Star Entertainment divested its interest in the project earlier this year. Initially, the project sought to replace the aging Treasury casino but evolved into a significantly larger venture that entailed a $2.5 billion price tag.
This ambitious project was intended to attract Asian high rollers, but the market for those customers has dwindled significantly following media scrutiny of potential criminal associations related to Crown and Star casinos. Regulatory pressures have intensified as a result of these allegations, creating challenges for casinos to operate under restrictive conditions.
Star's financial losses ultimately led to the sale of their Brisbane interest as they opted to concentrate on the nearby Star Gold Coast. Following acquisitions by US operator Bally's and the Mathiesen family, under the leadership of Bruce Mathiesen Jr., strategic adjustments are anticipated.
Umansky highlighted that the Queen's Wharf project and other Australian casinos also contend with numerous electronic gaming machines available throughout the country, which operate under different regulations. With around 200,000 machines available nationwide, Australia indeed experiences a significant abundance of these games.
