1. 1
NAME Matthieu RASSART
DEGREE MBA
SUPERVISOR Dr Barry Ip
TITLE Competitiveness Of The Casino Sector
In Las Vegas And In Macau -
A Comparative Study
DATE April 2015
STUDENT no 1212131
Project submitted in partial fulfilment
of the requirements of the
Master of Business Administration
of the
University of Cumbria

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ABSTRACT
STUDENT NAME Matthieu Rassart
DEGREE MBA
SUPERVISOR Dr Barry Ip
TITLE COMPETITIVENESS OF THE CASINO SECTOR IN
LAS VEGAS AND IN MACAU - A COMPARATIVE STUDY
DATE April 2015
KEYWORDS COMPETITIVENESS
CASINO-SECTOR
MACAU
LAS-VEGAS
ABSTRACT
The main objective of this dissertation is to compare the key success factors and
constraints of the casino industry in Las Vegas and in Macau, and to outline a strategy
for each of the two gambling destinations.
The dissertation starts with a background of the casino sector, the description of
Porter’s Diamond framework and its application to Las Vegas and Macau to identify the
determinants of competitiveness of each destination. After the literature review,
interviews were carried out with fifteen experts, comprising of academics, casino
executives, and gaming consultants in Las Vegas and in Macau to rank the key
success factors and constraints of each gambling hub and to outline the recommended
strategy for each location.
The main findings are that, even though most of the key success factors of the casino
industry are quite similar in both hubs (the proximity to a large population, the scale of
the casino industry, and the flexible regulation), most of the constraints are specific to
each gambling location. Therefore, the recommended strategy for each casino
destination is different, but implies for each destination to learn from the other hub to
continue its development. Las Vegas needs to focus on Asian (in particular Chinese)
visitors, especially with a higher budget (something that Macau has developed
extremely well), while Macau needs to develop the mass market (where Las Vegas
excelled with its amenities).
Recommendations for practice include that Las Vegas casino operators should target
more Asian high rollers (and offer more Chinese shows and indications), and that
Macau casino operators should develop non-gaming activities on Hengqin island.
Recommendations for policy include that the State of Nevada adopts Chinese as
second language in Nevada, and that the government of Macau eases employment
rules.

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ACKNOWLEDGEMENTS
I would like to thank my tutor Dr. Barry Ip, who was always available to provide great
guidance and feedback, and to support me in every step of the dissertation.
I am grateful to Dr. William Thompson (Professor at University of Nevada, Las Vegas)
and to Dr. Zhonglu Zeng (Professor at Macao Polytechnic Institute), who spent much
time and contributed several written sources to explain the factors of competitiveness
and the development potential of their gambling hub.
DECLARATION OF AUTHENTICITY
DECLARATIONS
I declare that the material contained in this project is the end result of my own
work and that due acknowledgement has been given in the bibliography and
references to ALL sources be they printed, electronic or personal.
And that:
The Word Count of this Project is 16,048.
SIGNED: Matthieu Rassart
DATE: 30 April 2015

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TABLE OF CONTENTS
Glossary and abbreviations 4
1. Introduction, with aims and objectives 6
2. A review of literature on the casino industry and
application of Porter’s Diamond framework 8
3. Methodology 23
4. Results and discussion 27
5. Conclusions 39
6. Evaluation 41
References 42
Appendices 46
GLOSSARY AND ABBREVIATIONS
Amenities: hotel rooms, restaurants, shows, shopping malls
Clark County: county located in southern Nevada, with Las Vegas as county seat;
population of 2,000,000 (accounting for nearly three-quarters of Nevada’s residents)
Cotai: 5.2 square kilometres piece of land between Coloane and Taipa islands,
reclaimed to build the Strip of Macau
Cross-selling: selling additional items to current clients
DICJ: ‘Direcção de Inspecção e Coordenação de Jogos’ is the Gaming Inspection and
Coordination Bureau of Macao SAR
GGR: gross gaming revenue
Hengqin: island in Zhuhai (Special Economic Zone in Chinese Guangdong province),
three times the size of Macau, adjacent to Coloane island, connected to Cotai by the
Lotus bridge; parts of Hengqin are leased to Macau
High roller: gambler betting large amounts of money
High roller: world’s tallest observation wheel and major Las Vegas attraction
Hoover Dam: dam on the Colorado River between Arizona and Nevada, built during the
Great Depression
Individual Visit Scheme: since 2003 (after SARS outbreak), allows Chinese to visit
Macau and Hong Kong on an individual basis

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Junket operators: VIP gaming promoters are travel agencies for VIPs, lenders of
gaming money and dealers; they provide Chinese players with credit at the casino and
debts are settled in local currency in China
LVCVA: Las Vegas Convention and Visitors Authority
Mass market: players who don’t get credit and don’t receive the VIP red carpet
treatment
Macau: SAR, part of the People’s Republic of China
MICE: Meetings, Incentives, Conferences, and Exhibitions
MOP: Macau pataca, currency of Macau
Pawn shop: business offering secured loans to people, with items of personal property
used as collateral
Porter’s Diamond framework: economic model developed by Michael Porter, using four
determinants to describe the competitive advantage of a location
Premium mass market: high-profit players, big spenders on accommodation,
restaurant, entertainment and luxury shopping
Renminbi: currency of the People's Republic of China
SAR: Special Administrative Region, autonomous territory outside Mainland China, but
within the sovereignty of the People’s Republic of China
SARS: Severe Acute Respiratory Syndrome, viral respiratory illness first reported in
Hong Kong, resulted in a big decrease of visitors to Hong Kong in 2003
Shadow banking: non-bank financial intermediaries providing banking services
Strip: 6.8 km part of Las Vegas Boulevard South in Nevada, renowned for its
concentration of casinos, used as model for the Cotai Strip in Macau
Tribal casino: native American casino on Indian reservations or other tribal land in the
United States
Underemployment: employment situation that is insufficient for the worker (for example
working part-time but wanting a full-time job)
UnionPay: sole domestic bank card system in China
UNLV: University of Nevada, Las Vegas
VIP: high roller, gambler betting large amounts of money; VIP players often come to
casinos through a junket operator

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1. INTRODUCTION
Motivation for the research
In line with the economic development, focus on the casino sector has been moving
from Europe (Monaco) to the United States (Las Vegas) and recently to Asia (Macau)
(Thompson 2014). Macau’s gambling revenue has risen from US$4Bn to US$45Bn
from 2003 to 2013 (DICJ 2015). The liberalisation of Macau’s casino sector and its
opening to foreign investors have triggered the largest increase in casino revenue in
history. The rapid change of balance between the old gambling hub of Las Vegas and
the new one of Macau has been analysed by Kim (2010). This dissertation will
thoroughly analyse the factors that built the competitiveness of Las Vegas and of
Macau, as well as the factors of decline of Las Vegas and the constraints of Macau,
and outline the possible development strategies of Las Vegas and of Macau.
The strategic management course in the MBA curriculum at the University of Cumbria
gives insights into Porter’s strategies and his analyses of the competitiveness of
companies, of sectors, and of countries/regions. This shows how they could use
competitive advantages to attract prospects and retain clients in order to gain market
share and build a strong stream of revenues and of profits.
The competitive advantage of nations (Porter 1990) provides a framework to compare
the competitiveness of countries or regions. Bourret et al. (2011) applied Porter’s
Diamond framework to Macau. This dissertation will first provide an updated application
of Porter’s Diamond framework to both Las Vegas and Macau, before ranking the
success factors and constraints of the casino sector in both gambling hubs, and
formulating recommendations for each location for further development.
Aims and objectives
The purpose of this dissertation is to determine the differences in competitiveness
between Las Vegas and Macau and to formulate recommendations for the future
development of the casino industry in Las Vegas and in Macau. To explore this subject,
the study will employ the use of theoretical principles, academic and economic articles
published on the subject, as well as interviews with executives and experts in Las
Vegas and in Macau.
The central research question of this dissertation is the following:
What are the differences in competitiveness of Las Vegas and Macau in the
casino sector and what should be the strategy of each destination?
Further subquestions important for the comparison of the current situation and for
future recommendations for each gambling hub include the following:
 What factors explain the rise and the decline of the casino industry in Las Vegas?
 What factors explain the success and the constraints of the casino sector in Macau?
 What strategy should Las Vegas pursue to regain competitiveness in the sector?
 What strategy should Macau pursue to remain competitive in the sector?
These research questions will allow the dissertation to take a broad and in-depth view
of the casino industry in both Las Vegas and Macau. This will enable an examination of
the factors that are either positive or negative for the development of both locations
according to the historical, the current and the expected future situation.

7. 7
Dissertation structure
The dissertation contains six chapters.
The second chapter is the literature review that provides a background of the casino
sector in Las Vegas and in Macau. Then, an identification is made of the theoretical
principles that serve as the basis of this dissertation. The next step is to apply the
theoretical principles to Las Vegas and Macau. The final part of the literature review is
to identify gaps in the existing research to justify the contribution of this dissertation.
The third chapter outlines the methodology used, first to find the most appropriate
references on the subject and to keep the most relevant pieces of literature, and then
to select the interviewees and to conduct the interviews with key stakeholders of the
casino sector in Las Vegas and Macau, in order to find and rank the key success
factors and constraints of each gambling hub and to outline the recommended strategy
for the casino sector in each location.
The fourth chapter provides the key results from the interviews carried out in both
destinations and offers a structured analysis of the findings. This is supported by a
discussion of the results and links to the literature review.
The fifth chapter is the conclusion. This chapter highlights the most notable findings
and explains how these findings can be used to explain the differences of
competitiveness of Las Vegas and Macau and how they can be applied to formulate
recommendations for the successful development of the casino industry in Las Vegas
and in Macau.
The sixth and last chapter is the evaluation. This part contains the limitations
encountered in the course of the research and of the analysis. It also indicates how
improvements could be achieved in further research. Direct recommendations for
strategic changes are also found in this chapter.

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2. A REVIEW OF LITERATURE ON THE CASINO INDUSTRY AND
APPLICATION OF PORTER’S DIAMOND FRAMEWORK
The literature review commences with providing background information on the casino
sector in general, in Las Vegas and in Macau. It continues with a definition of
competitiveness and a discussion of Porter's Diamond framework, and culminates in
the application of Porter's Diamond framework to the casino industry in Las Vegas and
Macau. The final part identifies gaps in the existing research.
An overview of the casino sector
Thompson (2014) explains that the first capital of casino gaming was Monaco. The
European casino model comprises monopoly locations, very high taxation, limited
access and players (elite), local markets, table gaming, ambience, décor, windows.
Las Vegas replaced Monaco from the 1950's by developing entertainment amenities.
Macau took the lead this century by pampering Chinese high rollers.
Global casino gambling revenue grew from US$100Bn in 2006 to US$160Bn in 2013
(Statista 2014). The USA (US$66Bn in 2013, including US$38Bn for the commercial
casinos) and China, concentrated in Macau (US$45Bn in 2013) are by far the two
largest casino markets in the world (Rubin Brown 2014).
Table 1: Casino gambling revenue (in billion US$)
Sources: Nevada Gaming Control Board 2015, Rubin Brown 2014, DICJ 2015
As can be seen in table 1, while the gambling revenues of Las Vegas have still not
recovered the pre-crisis level, the gambling revenues of Macau kept increasing strongly
almost every year (except a slower growth in 2009) to pass Clark County (Las Vegas)
in 2008 and even the total commercial gaming sector in the United States in 2012.
In 2014, Clark County had gaming revenues of US$9.6Bn, still about 10% less than
during the pre-crisis peak years of 2006 and 2007 (Nevada Gaming Control Board
2015). Kim (2010) explains that the crisis hurt Las Vegas by reducing the disposable

9. 9
income of potential visitors and by halting most of the planned investments and
developments. Most of the growth in Las Vegas is coming from non-gaming activities
due to a higher number of visitors. Comparatively, Macau had gaming revenues of
US$44.1Bn in 2014, way above the US$2.8Bn in 2002 and the US$10.4Bn in 2007, but
slightly lower than the US$45.1Bn in 2013 (DICJ 2015).
It can be seen in table 2 that Las Vegas attracts more visitors than Macau, but has
much lower gaming revenue, because the average gaming revenue per visitor is much
lower in Las Vegas than in Macau.
Table 2: Visitors (in million) and gambling revenue (in billion US$) in 2014
Sources: LVCVA 2015, Nevada Gaming Control Board 2015,
Statistics and Census Service Macau SAR 2015, DICJ 2015
The casino sector in Las Vegas
Las Vegas started as a transit place for travellers because of its permanent springs,
and became a switching junction for the expanding railway in 1905 (Luke 2010). After a
ban in 1910, casino gambling was fully legalised again in 1931 (Bybee 1999).
During the construction of the Hoover Dam between 1931 and 1936, thousands of
workers enjoyed legal gambling and prostitution, limited alcohol controls and easy
divorce in Las Vegas, enforced to attract more inhabitants. During the Second World
War, the US Army developed a huge training centre in the Mojave Desert, and later, a
site to test nuclear weapons. The soldiers and workers remained loyal customers and
strong advocates for the diversions of Las Vegas. One of the major catalysts of the fast
development of Las Vegas has been its close proximity to the 15 million people of the
Los Angeles - San Diego - Palm Springs region (Luke 2010).
In Clark County, there were 175 gaming locations generating US$9.7Bn gaming
revenue from 39.7 million visitors (LVCVA 2015), 4903 games and tables generating
US$4.1Bn gaming revenue and 117,266 slot machines generating US$5.6Bn gaming
revenue in 2013. By comparison, the State of Nevada had 339 casinos and US$11.1Bn

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gaming revenue, while the Las Vegas Strip alone had 41 casinos and US$6.5Bn
gaming revenue (Nevada Gaming Control Board 2015).
The casino sector in Macau
Macau started as a transfer port for the Portuguese for their trade between China and
Europe. The development of Hong Kong by the British ruined the role of Macau as
international trading harbour (Wang and Eadington 2007).
Since gambling was made illegal by the British in Hong Kong, Macau found its survival
in becoming the sin city of the region and in legalising gambling in the middle of the
19th century. In 1962, a monopoly gambling concession was granted to a company
that was later controlled by the Ho family (Lee and Mulcahy 2012).
The handover to China in 1999 created the opportunity for a big change. The new
government of Macau, backed by Beijing, ended the casino monopoly of the Ho family
(Luke 2010). The major event that ultimately created the current Macau casino sector
happened in 2001, when the government of Macau began the partial deregulation of its
casino industry (Lee and Mulcahy 2012).
One important catalyst of the fast development of Macau is its close proximity to the
120 million people living in the Pearl River Delta, drawing many visitors every day from
Guangdong, Guangzhou, Hong Kong, and overseas destinations (Luke 2010).
In Macau, there were 35 casinos (20 S.J.M., 4 Sands, 6 Galaxy, 1 Wynn,
3 Melco Crown, 1 MGM) in 2013, generating US$45.1Bn (66% from VIP, 34% from
mass market) from 29.3 million visitors, 5750 gaming tables, 13,106 slot machines,
27,137 hotel rooms (DICJ 2015). In 2012, 88% of Macau’s GDP and 83% of Macau’s
total public revenue came from gaming revenue. The government of Macau collected
about US$18Bn in taxes (including the 35% direct tax on GGR) and other levies on
gaming in 2013, compared to about US$1Bn for the State of Nevada (Hudson 2014).
Competitiveness and its four determinants (Porter's Diamond)
In this dissertation, the choice was made to compare the factors of competitiveness of
the gaming hubs of Las Vegas and Macau and to outline their development strategy.
The World Economic Forum defines competitiveness as “the set of institutions, policies,
and factors that determine the level of productivity of a country" (Schwab 2014).
To evaluate the competitiveness of the casino sector in Las Vegas and in Macau,
applications of Porter's Diamond such as that by Bourret et al. (2011) will be
considered. Here, Porter (1990) uses four determinants to describe the competitive
advantage of a nation: factor conditions, demand conditions, related and supporting
industries, and firm strategy, structure and rivalry, as can be seen in table 3.

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Table 3: Porter's Diamond
Source: Porter (1990)
Factor conditions are the inputs necessary to be competitive. They include physical
resources (quality, quantity, cost and accessibility of land and of natural resources;
location can affect the cost of transportation and the ease of interchange), human
resources (quantity, skills and labour cost), knowledge resources (pool of technical,
scientific, and knowledge of the market), capital resources (cost and amount of capital
to finance the industry growth), infrastructure (quality, type, and cost of use). The most
important factors are created within a nation and not inherited. That is why the amount
of available factors is less important compared to the rate and easiness at which those
are upgraded, created and personalized to chosen specific industries. Nations succeed
in sectors where they excel at creating and improving the required factors. That is why
the ability to create factors in a nation is more precious for competitive advantage than
the factor pool that already exists (Porter 1990).
Home demand conditions shape the rate and type of innovation and improvement.
Three characteristics are significant: the composition of home demand (segment
importance, sophistication, anticipatory home buyer needs) provides the basis of the
advantage, the size and type of growth can increase the advantage, and the
internationalisation of domestic demand (Porter 1990).
Related and supporting industries give potential advantages by producing inputs widely
used or key to innovation or to internationalisation (Porter 1990).
Firm strategy, structure and rivalry represent the overall context. Domestic rivalry is
particularly important to develop a strong competitive advantage in an industry as it
puts pressure on companies to improve their service and to innovate (Porter 1990).

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Chance and government are other variables. Chance events (pure invention, war, etc.)
create disruptions that can modify the structure, allowing one nation to replace another.
Government can influence and be influenced by each determinant. Factor conditions
are influenced by subsidies and policies (education, capital markets, and so on).
Demand conditions are influenced by specific standards or regulations, purchases,
while related and supporting industries are influenced by regulations and policies.
Context is influenced by antitrust regulations, tax policy, capital market limitations, and
such like (Porter 1990).
Porter’s Diamond is a mutually reinforcing system, the effect of one determinant being
dependent on the situation of the others. Nations or regions succeed in specific
industries because their domestic environment is challenging and dynamic, stimulating
companies to improve and to innovate (Porter 1990). The productivity advantages of
agglomeration (access to specialised inputs, employees, information, and institutions)
encourage companies to cluster ever more. Many determinants of current productivity
also foster innovation in the cluster, increasing the productivity further (Huggins et al.
2013).
The Diamond of Porter will now be applied, first to Las Vegas, and then to Macau.
Application of Porter's four determinants of competitiveness to Las Vegas
Factor conditions
In terms of physical resources to develop new projects, Las Vegas has plenty of land
available, its geographical location is bad, but is compensated by good infrastructure,
and water is becoming an increasing constraint.
The abundance of land is illustrated with Las Vegas City having a land area of 135.82
square miles (352 km²) and Clark County, Nevada, has an area of 7,891.43 square
miles (20,439 km²) (United States Census Bureau 2014). Therefore, contrary to what is
described later for Macau, Las Vegas has enough land to develop new casinos and
many other activities. Las Vegas can grow its offer of entertainment and gambling
destinations according to the demand of the visitors.
Geographical location is arguably bad. Las Vegas is located in Nevada, a state with
very few inhabitants and a lot of land, but it is not far from the 15 million people of Los
Angeles-San-Diego-Palm Springs area. Moreover, several thousands of travellers
come through Los Angeles airport from all over the world and a lot of them want to take
a trip to Las Vegas when coming to Los Angeles (Luke 2010).
The infrastructure of Las Vegas is very good, especially McCarran airport and the I-15
highway. Air travel is particularly important for Las Vegas, contrary to Macau. Las
Vegas McCarran International Airport was the seventh busiest airport in 2013 with
520,992 movements and 40,933,037 passengers (ACI 2014). Most of this volume is
attributable to recreation and tourism (Urban Environmental Research 2008). McCarran
International Airport is contributing to the visitor flow with increased international flights.
Virgin Atlantic will be flying from London, Manchester and Glasgow directly to Las
Vegas from 10 September 2015 (Virgin Atlantic 2014). Las Vegas lost passenger rail
service in 1997. Because of congestion on the freeways between Los Angeles and Las
Vegas, and with airline travel into McCarran International approaching full capacity,
passenger rail options are again being considered (Vekshin and Nash 2014).

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Water is a major constraint in Las Vegas, which is situated in a landlocked desert.
Lake Mead provides 90% of the drinking water. As the population of Las Vegas has
increased by 400,000 to 2,000,000 inhabitants during the last ten years, the lake is now
under half full. Neighbouring California cannot help because it is suffering from a three-
year drought. Las Vegas plans to build a pipeline pumping groundwater from 260 miles
away. A future solution will probably include more water conservation and restricted
growth (Allen 2014).
Human resources with low skills are widely available at a relatively low cost. There is
an abundance of available labour in Las Vegas, especially compared to the lack of
available labour in Macau. Unemployment rate in Las Vegas area was 6.8% in October
2014 (compared to 5.5% in the United States), coming from a peak of 14.5% in July
2010, as can be seen in table 5 (U.S. BLS 2014).
Table 5: Unemployment rate in Las Vegas (in %, 1990-2014)
Source: U.S. BLS (2014)
In Las Vegas, only 82% of people have at least a high school diploma, lower than the
national average of 86%, and only 21% have at least a bachelor’s degree, also lower
than the national average of 29% (United States Census Bureau 2014), which means
that there are many unqualified people available for lower skilled jobs in the casinos.
According to the U.S. BLS (2014), the average hourly wage of gaming dealers was
US$8.20 in Las Vegas, lower than the average US$10.04 in the United States. On the
contrary, the average hourly wage for bartenders (US$13.31 vs US$10.46), for maids
(US$15.10 vs US$10.64) and for gaming supervisors (US$26.62 vs US$23.53) was
higher in Las Vegas than in the United States.
Concerning knowledge resources, UNLV has many experts in the gaming industry and
extensive gambling resources in its Center for Gaming Research. Its William F. Harrah
College of Hotel Administration includes the Hospitality Research & Development
Center and the International Gaming Institute, the world leader in custom training
programmes, online casino management courses, gaming management seminars,
gaming regulation seminars and cutting edge research (UNLV 2014a).

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Capital resources are also widely available, in sufficient quantity and at a relatively low
cost, to finance the industry growth (Okada 2014).
Demand conditions
Clark County has about 2 million inhabitants and only a small part of Las Vegas casino
visitors are from Clark County. In 2013, foreigners increased their share from 14% in
2009 to 20% of Las Vegas visitors in 2013, but 80% came from the United States. In
2013, Western States represented 52% of the visitors (California 33% and Southern
California alone 26%), Southern states 12%, Midwestern states 10%, and Eastern
states 6% (LVCVA 2015).
Las Vegas is every year among the two most popular summer and winter destinations
in the United States, but its market share has decreased over the years (ASTA 2014).
Table 6: Number of visitors and en/deplaned airline passengers 1970-2014
(in million per year in Las Vegas)
Source: LVCVA (2015)
As can be seen in table 6, there has been an increase in the number of visitors to Las
Vegas, especially until 2007, before the decline due to the crisis and the recent
bouncing back to over 41 million visitors per year. The increase in the number of
en/deplaned airline passengers has even been stronger, as well as the decline after
the crisis, because of the strong increase in resident population (LVCVA 2015).
Tourism’s economic impact for 2013 in Clark County was US$45.2Bn (including
USD$9.7Bn spent on gambling). An average Las Vegas visitor was 46 years old,
coming with 2.4 people in his party, staying 3.3 nights, paying $111 per night for the
room, shopping for $141, spending $38 for shows, gambling 2.9 hours per day and
losing $530, 42% arrived by plane and 58% by vehicle, 15% were first-time visitors
(Clark County 2014).

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Las Vegas revenue is diversified, including mass-market (slot machine) players and
non-gaming activities (entertainment, conventions, food and beverage, shopping). Only
a small part of Las Vegas visitors are there only for gaming and most visitors consider
gaming as a form of entertainment. Tourism in Las Vegas has suffered from the
financial crisis and from the housing crisis, because people come to Las Vegas to
spend their disposable income for fun, and the crisis has reduced their disposable
income (Kim 2010).
Nielsen (2014) indicates that with the strengthening of the economy and the
improvement of consumer confidence, consumers feel increasingly comfortable to
spend money on and during holidays. As can be seen in table 7, total revenue of Las
Vegas casinos has bounced back since the crisis, but is still under the 2007 level,
because gaming has not fully recovered. Other revenue types (rooms, food, beverage,
and other) have recovered since the crisis.
Table 7: Revenue of Las Vegas casinos 1990-2014
(in US$Bn, for casinos with at least US$1M revenue per year)
Source: compiled by the author, based on Nevada Gaming Control Board (2015)
Related and supporting industries
Most casinos include hotels, restaurants, and entertainment as well as shopping malls,
to keep the customers on the location. MICE events are a way to attract additional
visitors and give them an opportunity to stay. According to Thompson (2014), Las
Vegas remains the best in the world for amenities.
As can be seen in table 8, the casinos of Las Vegas have become less dependent on
gaming revenue that fell from 61.5% in 1990 to only 43.1% of total revenue in 2014.
On the contrary, room revenue increased from 14.2% in 1990 to 22.4% in 2014, while
food and beverage revenue increased from 16.9% in 1990 to 22.0% in 2014, and other

16. 16
revenue (shows, nightclubs, pool parties, retail, etc.) increased from 7.4% in 1990 to
12.5% in 2014 (Nevada Gaming Control Board 2015).
Table 8: Split of revenue of Las Vegas casinos 1990-2014
(in % of total casino revenue, for casinos with at least US$1m revenue per year)
Source: compiled by the author, based on Nevada Gaming Control Board (2015)
In Clark County, there were 150,544 rooms end of December 2014. The average daily
room rate was US$117 and the average occupancy rate was 86.8% in 2014 (LVCVA
2015). Revenue from hotel rooms is still below the pre-2008 crisis levels, but is
experiencing a regular growth for the last few years (UNLV 2014b).
As indicated by Vitner and Wolf (2014), a big part of the increase of the economy is
due to the hospitality and leisure industry, employing 28% of the workforce of Nevada,
and even over 30% in Las Vegas. The biggest gains were for the restaurants. Las
Vegas is ranked number 2 by Nielsen as best market for restaurant growth, attracting
even more new restaurants (Nielsen 2014).
In terms of entertainment, Las Vegas offers a broad range of live shows, nightclubs,
pool parties, exhibits, musea, and theme parks. Live shows and nightclubs reign on
Las Vegas nights. On December 23rd
, 2014, there were 31 shows (ranging from US$44
to US$131 per seat), including 8 different shows of Cirque du Soleil (Vegas.com 2014).
Club Rio, the first large nightclub, opened in 1995. Las Vegas harbours 15 of the top 30
nightclubs in the U.S., and the complete top 5: XS (Encore), Marquee (Cosmopolitan),
Hakkasan (MGM), Tao (Venetian), and Surrender (Wynn) generate each annual
revenues between US$40m and US$95m (Nightclub & Bar 2014). In 2004, the Hard
Rock Hotel opened its pool party and was followed by competitors. In spring 2015, 25
pool clubs and pool parties will be open (Vegas.com 2014). A new MGM-AEG Arena is
expected to open in spring 2016 (Okada 2014). MICE events have suffered a lot after
the crisis, falling from a peak of 6,307,961 delegates in 2006 to 4,473,134 delegates in
2010, and a slow recovery is under way with 5,169,054 delegates in 2014 (LVCVA
2015). Tours include Grand Canyon, Hoover Dam, Las Vegas Strip by bus or by

17. 17
helicopter, Red Rock, Lake Mead and Colorado River, buggy and quad tours.
Attractions include High Roller, car racing, etc. (Vegas.com 2014). Shopping is also
developing, with Las Vegas having 2.5 million square feet under construction (PNC
2014).
Firm strategy, structure, and rivalry
Las Vegas is an open city, which legalised the gambling industry in 1869, banned it in
1910, and fully legalised it again in 1931 to collect taxes, stimulate the economy and
reduce criminality (Bybee 1999). This open environment has allowed the development
of many new activities.
Contrary to Macau with its gambling monopoly in China, Las Vegas has to fight with
other regional (Reno, Atlantic City, etc.) and tribal casinos in its home market to attract
the gamblers. The intense rivalry and competition has forced the different operators in
Las Vegas to improve their service and to innovate (Schwartz 2013).
Chance
Las Vegas benefitted from becoming a switching junction for the expanding railway
(encouraging the development of warehouses and stockyards), from the construction of
the Hoover Dam (bringing in thousands of workers), and from the Second World War
(training center bringing in thousands of soldiers) (Luke 2010).
Government influence
Government has relatively little influence in Las Vegas, especially compared to Macau.
According to the American Gaming Association (2012), Nevada has the lowest state
gaming tax rate in the United States. The casinos pay a maximum of 6,75% on GGR.
Additional levies and fees add approximately 1%. This means that the casinos in Las
Vegas pay 5 times less taxes on their GGR than in Macau (8% in Las Vegas compared
to 40% in Macau). However, corporate profits are taxed at 35% in Las Vegas and at
0% in Macau (Huang 2010).
In addition to that, the State of Nevada has no state income taxes (Laffer and Moore
2012), which attracts many employees wanting a higher net salary.
Porter’s Diamond framework will be applied to Macau in the next section.
Application of Porter's four determinants of competitiveness to Macau
Factor conditions
The geographical location of Macau is excellent. Macau is well situated, in the Pearl
River Delta, one of the world’s most densely urbanised areas and one of the main
Chinese centres of growth (Luke 2010).
The infrastructure of Macau is arguably good, but can be improved. Lee and Mulcahy
(2012) explain that a better and faster infrastructure system will help to develop the
mass market. The evolution of the railway system will create a more sophisticated
transport system in China. The Guangzhou-Zhuhai Intercity Rail Transit’s Zhuhai
Station has been completed and is situated just outside Macau, near the Gongbei
border gate.

18. 18
Hudson (2014) also explains that, in 2013, 54% of all the visitors entered by land (most
of them through the Gongbei Border Crossing in Zhuhai), 39% by sea on ferry boats
and 7% by air. He also identifies two key infrastructure developments under way. The
Hong Kong-Zhuhai-Macau Bridge, expected to be finished in 2016, will shorten the
drive from Hong Kong to Macau to 30 kilometres. The Macau Intercity Light Rail Transit
system, to be finished in 2015, will run across the Macau Peninsula, Taipa and Cotai,
and serve the major border checkpoints including the Gongbei Border Crossing, the
Lotus Bridge, the Macau International Airport and the Outer Harbor Ferry Terminal.
The ferry connections are excellent, but Macau international airport has limited
connections with China and some other Asian cities, so Macau relies on Hong Kong for
a big international airport.
Education level in Macau is good. The enrolment rate for pre-primary, primary and
secondary education was 92.1%, 99.3% and 97.6% respectively (Statistics and Census
Service Macau SAR 2013). This means that the casino industry in Macau has a pool of
educated graduates to choose from for their strategic managerial positions. However,
this also means that there will be a lack of unskilled workers in the near future to work
at the casino gambling tables and other less qualified positions in the casino industry.
Shortage of labour is a major constraint. Unemployment rate was 1.7% of the
population at the end of 2014 (APG 2015), which means that it is very difficult for
companies to find employees since the available workforce is very small. Macau is
experiencing some economic and social issues that developped because of the
important share of the gaming industry in its economy (Stassen 2013). Labour shortage
is growing into an important problem for Macau and the ongoing new casino
developments are worsening the problem since the casino sector is taking labour from
all the other sectors. Labour cost in Macau is rising because casinos can afford to offer
better pay and good working conditions. Local businesses cannot compete with the
offer of the casinos and therefore lose a big part of the available workforce.
Limited land and natural resources are also major constraints in Macau. Fong et al.
(2009) explain that, because of the limited area of 30.3 square kilometres (Statistics
and Census Service Macau SAR 2015), Macau has some limitations concerning the
building development and infrastructure development. Land reclamation is a possible
solution, but spare area for that purpose will become saturated in the near future. In
addition to that, the natural resources are very limited to sustain further development of
tourism in Macau (Pao 2004).
Demand conditions
Macau itself represents a very small domestic market (0.6 million inhabitants in 2013)
with a high GDP per capita of US$87,306 in 2013 (Statistics and Census Service
Macau SAR 2015). However, Macau has a very large hinterland market with the
neighbouring Chinese province of Guangdong (106.4 million inhabitants in 2013) and
Hong Kong (7.2 million inhabitants in 2013) (Levinger 2014). Guangdong is the largest
Chinese province by GDP with a GDP of RMB5.7Tn (US$900Bn) in 2012, a growth of
260% compared to 2003. GDP per capita increased by 44% between 2008 and 2012
(National Bureau of Statistics of China 2014).
Table 9 shows the importance of Guangdong visitors, the strong growth in Mainland
Chinese visitation to Macau, and highlights that the strongest growth comes from
provinces served by high-speed trains.

19. 19
Table 9: Mainland Chinese visitation to Macau
Sources: Statistics and Census Service Macau SAR 2015,
National Bureau of Statistics of China 2015, LVS 2015
In 2014, there were 31.5 million visitor arrivals, 67.4% from Mainland China (42.4% of
them from Guangdong), 20.4% from Hong Kong, 3.0% from Taiwan (Statistics and
Census Service Macau SAR 2015). The growing part of Chinese visitors coming from
outside Guangdong is due to both increasing disposable incomes (making the trip to
Macau more affordable) and to better infrastructure such as high-speed trains.
Asians, and more specifically the Chinese, like to gamble. The Chinese gambling
culture has been one of the main factors behind the success of Macau (Bourret et al.
2011). A major driver of the growth of Macau has been the increase of wealthy Chinese
citizens (see appendix D for the geographical location of Chinese rich and super-rich).
The USA had 4,006,000 millionaires (in US$) in 2013, and China 758,000. The
increase of the number of millionaires between 2006 and 2013 was 25% in the U.S.
and 120% in China. The total wealth of Asia-Pacific millionaires has surpassed the U.S.
in 2010 and reached US$14.2Tn in 2013, compared to US$13,9Tn for the US. China’s
growth of millionaires during recent years has far surpassed the growth of other
countries. China has still a long way to go to reach the levels of the USA or of Europe,
which means the growth potential is there, which is a good factor for further
investments and purchasing power (Capgemini Financial Services Analysis 2014).
Macau is the seventh preferred domestic travel destination of Chinese millionaires (with
15% of preferences in 2013), well after other southern destinations such as Sanya,
Hong Kong and Yunnan (Hurun 2014). The crackdown of Chinese President Xi Jinping
on corruption has significantly decreased spending by VIP gamblers in Macau, the only
place in China where casinos are legal. The increase in mass average spending per
visitor started to slow in July 2014 because the premium mass players were impacted
by transit visa restrictions and anti-corruption concerns (Cheung and Curtis 2014).

20. 20
Table 10: Casino sector cluster in Macau
Related and supporting industries
As can be seen in table 10, supporting industries in Macau include not only hotels,
restaurants, MICE events, transportation, and machine manufacturers, but also junket
operators and pawn shops, mostly to lend gaming money. Most casinos include hotels
and restaurants to keep the customers on the location. MICE events are a way to
attract additional visitors and give them an opportunity to stay an average of two days
(compared to maximum one day for the average visitors). The number of attendees
increased from 572,684 in 2009 to 2,033,908 in 2013 (Statistics and Census Service
Macau SAR 2015). Junket operators or VIP gaming promoters are travel agencies for
VIPs, lenders of gaming money and dealers; they provide Chinese players with credit
at the casino and debts are settled in local currency in China. Pawn shops pretend to
sell customers expensive watches or pieces of jewellery, charge the amount in
renminbi to their Unionpay debit card, and then give them 90% of the amount in Hong
Kong dollars as if they had returned the object for a cash refund (Tsui 2012).
Related industries include shopping malls, currency exchange, communication, and
information technology. Shopping is booming. Total retail space grew from about
300,000 square feet in 2007 to about 5,000,000 square feet today, almost half in the
new gambling develoment of Cotai. More projects are underway (Cohen 2014). Retail
sales exploded from about MOP14Bn in 2007 to about MOP65Bn in 2014 (Statistics
and Census Service Macau SAR 2015).
Firm strategy, structure, and rivalry
Macau is characterised by a liberalised gambling industry and healthy competition. The
bidding process for new casino operators, which ended the monopoly of Stanley Ho,
was launched in November 2001. The Macau government wanted to encourage
overseas investors to open new casinos and succeeded in doing so. There are now 6
competitors instead of the monopoly. The inward direct investment flow grew from
MOP3Bn (49% in gaming) in 2002 to over MOP36Bn (77% in gaming) in 2013
(Statistics and Census Service Macau SAR 2015).
Emerging foreign competition can be both a threat and an incentive to improve and
innovate. Recent innovation in Macau includes the sale of 300 apartments in the new
Las Vegas Sands project (Stutz 2013). Nevertheless, Bourret et al. (2011) state that
the strategy of the casino cluster in Macau cannot be sustainable for four reasons.

21. 21
The first one is the increase of the regional competition in South East Asia (including
Singapore, South Korea, Philippines, Japan, and Vietnam). The second reason is the
high dependence of the government on the casino industry for income. The third is the
growing popularity of online gambling among younger people, meaning the future
generation of gamblers could feel less attracted by gambling destinations. The fourth is
the possible future liberalisation of gambling in Mainland China, which could see
Macau losing many gamblers, since the majority of the gamblers are Chinese.
Chance
As the development of Hong Kong by the British ruined the role of Macau as
international trading harbour (Wang and Eadington 2007), and since gambling was
made illegal by the British in Hong Kong, Macau found its survival in becoming the sin
city of the region and in legalising gambling in the middle of the 19th century (Lee and
Mulcahy 2012).
Government influence
The Macau government and the gambling concessions encourage healthy competition,
forcing the industry to modernize (Zheng and Hung 2012).
Huang (2010) gives a summary of the taxes and advantages for the casinos in Macau.
Total casino taxes in Macau are relatively high, slightly higher than 39%, much higher
than the 12% in Singapore and less than 8% in Las Vegas. But casinos are exempt
from many other taxes (corporate income tax, etc.). In addition, casinos can lease land
at a very low rate from the Macau government. Overall, the total tax environment
(including gaming tax, corporate income tax, equipment and facilities import tax, lease,
etc.) in Macau seems comparable to the one in Las Vegas and in Singapore.
Moreover, the central government of China has decided that no casino would be
established in Mainland China nor in Hong Kong. Furthermore, its individual visit
scheme allows Chinese visitors to visit Macau on an individual basis since 2003 (Zeng
2013).
Gaps in existing studies
The assessment of the casino sector in Las Vegas and in Macau has been achieved by
using Porter’s Diamond framework, which was extensively explained at the beginning
of the literature review. Then, an explanation was given to understand how Las Vegas
and Macau are important destinations in the context of the casino industry. The
historical development of both cities explains how they have now become the 2 major
global gambling hubs. The development of the casino industry in Nevada and Macau
has started a long time ago, and was fuelled by similar factors. However, Macau has
managed to take the lead in recent years thanks to its opening to foreign investors and
its monopoly as only authorized Chinese gaming destination.
Bourret et al. (2011) applied the Diamond framework to the gambling cluster in Macau.
This dissertation expands the analysis by applying the framework to Las Vegas. Kim
(2010) compared the Las Vegas and Macau gaming markets. His analysis provides
useful data and sources, but lacks a thorough methodology and a theoretical
framework.
The dissertation will now proceed to select the most important determinants of
competitiveness for the development of the casino sector in Las Vegas and in Macau

22. 22
by interviewing key analysts and players in both destinations. It will apply those key
determinants to outline development strategies for each gaming hub. In order to do so,
the literature review will be the main tool to identify possible strategies and to measure
their effectiveness and relevance. The dissertation will refer to the different theoretical
and practical elements that have been explained and identified in the literature review
to give it more weight and depth.

23. 23
3. METHODOLOGY
As a central component of this dissertation, interviews have been conducted with key
stakeholders of the casino sector in Las Vegas and Macau, with a double objective:
first to find out what determinants of competitiveness they consider the most important
in each gambling destination, and then to outline the development strategies they
favour for the casino sector in each location. Their opinions are important, since they
are experiencing the evolution of the industry. The interviews represent an excellent
basis to elaborate recommendations for future development strategies. However, the
opinions of the interviewees have been compared to the literature in order to select the
key competitiveness determinants and elaborate the best strategies for each gambling
hub.
Research methods
The methodology was devised following the recommendations of Bryman and Bell
(2011) and Levin (2005). Analytical research has been carried out in this dissertation to
identify which factors made it possible for Las Vegas and Macau to become the two
biggest gambling hubs in the world and to examine the differences in competitiveness
of Las Vegas and Macau in the casino sector.
In the dissertation, deductive research was also of primary importance, which means
moving from general ideas and theories to specific situations. This will prove useful
when recommending courses of action to develop stronger market positions for both
gambling hubs taken from broad competitive and development strategies. Moreover,
two methods of research are possible to analyze the literature found during the
information search. Those are the quantitative and qualitative research methods.
Quantitative research is objective, using numbers to gather data on the world.
Qualitative research is subjective, using perceptions that can depend on the person
and the time (Simon 2011). This dissertation is using quantitative research for the data
elements used in the literature review and qualitative research with the interviews.
This dissertation uses a narrative presentation style. Narrative research analyses
articles and carries out interviews to understand the issue (Creswell et al. 2007). The
research commenced with a desk research to find the available information in existing
documents, and continued with interviews of executives in Las Vegas and in Macau.
Search words have been adapted to find the most relevant academic and non-
academic literature sources on competitiveness, on the casino sector in general, and
on the casino sector in Las Vegas and in Macau. One thousand documents have been
read and analysed. Sixty-eight have been selected as references.
To explore current thinking on competitiveness, recent textbooks, academic
publications, and journal articles, have been accessed via Quest, a cross-search
discovery tool provided by the University of Cumbria, that searches across many
databases. Information on growth history has been retrieved from the statistics of the
Las Vegas Convention and Visitors Authority and of the Nevada Gaming Control Board
for Las Vegas and the figures of the Statistics and Census Service and of the Gaming
Inspection and Coordination Bureau for Macau, as well as market studies. To explain
the rise and then the decline of the casino industry in Las Vegas as well as the success
and the constraints of the casino industry in Macau, an examination has been made of
academic studies (including the many studies published by the University of Nevada,
Las Vegas and by the University of Macau) as well as reports of analysts found via
Quest and other providers. To determine which determinants, identified in the literature

24. 24
review, are the most important in Las Vegas and Macau, an interview questionnaire
has been used to discuss the determinants of each gambling destination with several
stakeholders in the two gambling destinations. Those determinants have been ranked
according to their importance to the stakeholders. The recommended strategy for Las
Vegas and for Macau has also been elaborated from these interviews in Las Vegas
and in Macau.
Interview methodology
Groenewald (2004) refers to Kvale (1996) who defines an interview as “an interchange
of views between two persons conversing about a theme of mutual interest”, where the
interviewer tries to understand the interviewees’ world through their eyes. Interviews
can either be structured, semi-structured, or unstructured. The answers of the
structured interview are always pre-defined so that the interviewees are limited to pre-
established responses. The semi-structured interviews look like structured interviews
because the questions have also been planned beforehand. However, the semi-
structured interviews allow the interviewees to answer in a more detailed way to the
open-ended questions. Finally, unstructured interviews are used to discuss extensively
about only one or two topics (Fox 2006).
The type of interview method used in this dissertation has been semi-structured, using
an interview questionnaire (interview questions have been designed based on the
central research question and the subquestions mentioned in the aims and objectives
section of the introduction), with mostly open-ended questions, and other questions in
line with the evolution of the conversation. Interviews have been carried out face-to-
face to allow the interviewees to get deeper in the discussion. By doing so, the
participants would be more inclined to reveal their opinions. The setup of the interview
has been made as a personal collaboration between the interviewer and the
participants so that direct and open questions could be used to encourage detailed
stories and narratives to be told (DiCicco-Bloom and Crabtree 2006).
Testing procedures of the questionnaire included interviews with colleagues and family
members to check the time needed to respond to the questions as well as the amount
of material discussed. During these procedures, it was acknowledged that the
questions would have to be precise in order for the interviewees to understand them
quickly and answer them in a specific way so as to be thorough and concise.
Following the recommendations of Creswell (2008), it was decided to arrange an
interview programme with fifteen people (Groenewald 2004). Interviews were continued
up to the moment where no additional insight was discovered. Participants have been
selected according to their involvement in the casino industry in Las Vegas and Macau,
their availability for interviews and their desire of involvement in the dissertation. Three
main categories have been targeted: academic experts, gaming consultants, and
casino executives. Academic experts have been selected based on interesting
documents found during the desk research. Gaming consultants have been chosen
based on their expertise. Casino executives have been identified based on their
LinkedIn profiles.
Fifty persons have been contacted by e-mail to participate in interviews on the
development of the casino sector in their city. Fifteen have accepted to participate to
some extent, and their age, gender, and experience have been recorded. The
interviewees have been balanced in the best possible way to represent both Las Vegas

25. 25
and Macau, so as to collect enough opinions of both gambling destinations (see
appendix A).
Six main questions (see appendix B) were posed to the interviewees in both Las Vegas
and Macau, covering the topics relating to the development factors in both locations as
well as possible recommendations that could positively influence their evolution. The
topics discussed include the differences in competitiveness of the casino industry in
Las Vegas and Macau, which factors influence the development of the casino industry
in each location, and which strategy the casino industry in each of both locations
should pursue in order to remain competitive. Even though it was not always possible
to ask all the questions to every interviewee due to time constraints, the interviewer
managed to ask the questions covering the most important topics and assets of each
location. These questions aim to provide a strong basis in the process of formulating
possible recommendation strategies for both gambling hubs.
Informed consent forms (including the purpose and procedure of the research, as well
as the rights to participate voluntarily, to withdraw at any time, to ask questions, and to
have their privacy respected) and anonymity have been put in place to protect the
rights and identity of the respondents (Creswell 2008). The informed consent e-mail
can be found in the appendix C.
Interviews have been conducted mostly in face-to-face meetings. During the interviews,
the answers given by the interviewees have been recorded by written notes. Face-to-
face meetings have been completed by e-mail and by telephone discussions, in order
to have different views on the subject and to collect a reasonable amount of data for
comparison purposes. Meho (2006) has found that the quality of the responses is not
much different in e-mail interviews compared to face-to-face interviews. The quality
depends on the interviewee, the competence of the interviewer, and the clarity of the
questionnaire. In this dissertation, it was useful to have a face-to-face meeting to build
the trust to go deeper into the subject in follow-up e-mails and telephone calls.
Furthermore, when conducting the face-to-face interviews, several attempts have been
made to obtain further relevant qualitative information such as official reports, articles,
and other personal documents wherever possible.
Data analysis
When the data collection was done, all the pieces of information were organized to
analyse them. This was done by making a transcription of the different interviews,
collecting e-mail responses, and sorting the data in different types.
As starting point, a thorough analysis of the information was carried out. This was done
by organizing the unstructured material into pieces of text to assign meaning to it. After
the most important and relevant part of the information gathered has been reviewed
with the notes that have been written, every document was reviewed to identify its
meaning in the context of the casino industry. Following the reviews of the pieces of
information, the topics identified are put together in a list and are separated as unique
topics, major topics, and other topics. At the same time, the researcher looked whether
new categories were to be added. The topics have then been grouped to form
descriptive categories according to relationships and similarities. The data that was
found and identified during the research was put together in matching categories in
order to carry out a preliminary analysis. The process of grouping is explained by
Creswell (2008) as useful in generating descriptions for themes, settings or categories.

26. 26
The different themes surrounding the subject of the competitiveness in the casino
industry in Las Vegas and Macau have been reviewed to include the new found data.
These new insights may be important for the meaning from the personal thoughts of
the researcher on the topics or on his meaning about the literature and theories. Some
additional questions may need to be asked. Following that, the several themes and
descriptions are criticised to highlight possible problems with differing meanings
(Alvesson and Deetz 2000).
The data for the research study was collected in the period between November 2014
and March 2015. Some constraints and limitations in this dissertation include the
incomplete access to some research topics and materials which could have been
important to some aspects of this comparison between the casino industries in Las
Vegas and Macau.
All the research and recommendations are based on published literature and interviews
with academic experts, gaming consultants, and casino executives in Las Vegas and
Macau (depending on their availability). Some information concerning Macau has been
difficult to verify and confirm because of the limited and restricted access.
The next chapter presents the results of the research and an analysis of the findings.

27. 27
4. RESULTS AND DISCUSSION
This chapter presents the key results from the primary research and offers a structured
analysis of the findings. For the purpose of this dissertation, fifty stakeholders of the
casino industry were contacted (including academic experts, gaming consultants, and
casino executives), both in Las Vegas and Macau. From these stakeholders, fifteen
(six in Las Vegas and nine in Macau) agreed to participate in interviews. Of these, eight
were conducted face-to-face and seven via e-mail.
For the purpose of maintaining privacy and anonymity, participants from Las Vegas are
referred to as LV1 to LV6 and those from Macau as M1 to M9, as seen in table 11.
Table 11: Interviewees
The purpose of the present study is to compare the competitiveness of the casino
sector in Las Vegas and Macau. Participants were presented with the following key
questions:
1. Which factors explain the rise of the casino industry in Las Vegas?
2. Which factors explain the decline of the casino industry in Las Vegas?
3. Which strategy should Las Vegas apply to regain competitiveness in the casino
sector?
4. Which factors explain the success of the casino industry in Macau?
5. Which factors explain the constraints of the casino industry in Macau?
6. Which strategy should Macau apply to remain competitive in the casino sector?
The following sub-sections will explore the key outcomes from each of the above
questions in turn.
Factors explaining the rise of the casino industry in Las Vegas
Las Vegas managed to attract visitors by being close to Los Angeles, by offering an
excellent transportation network, by being an ‘open city’, by providing the best
entertainment, by creating convention centers and convention space, and by marketing
itself better than other gaming destinations.

28. 28
Relative proximity to Los Angeles region and excellent transportation network
LV1 cites “the fast development of the McCarran International Airport, located just next
to the Las Vegas Strip, as the most important factor that dramatically increased the
number of visitors to Las Vegas”. LV2 adds that “the use of jet-propelled airplanes
made it possible to bring the visitors from further away”. LV4 thinks that “the
construction of the highway from Los Angeles to Las Vegas enabled a fast increase of
the visitors from California, which represent the main part of the visitors to Las Vegas”.
Indeed, the relative proximity to Los Angeles and the excellent transportation network
were already mentioned in the literature review and represent major success factors.
Las Vegas as ‘open city’ created competition and the development of a large
offer of amenities
LV3 and LV1 are considering Las Vegas to be an ‘open city’. As LV1 explains, this
means that “any casino operator is allowed to build a new casino without restrictions
where they want and with as many gaming tables and gaming machines as they like”.
He adds that “the Las Vegas model has been established through free market
development over a more than seventy year period of time in Las Vegas”. LV2 explains
that “Las Vegas managed to build a strong competitive advantage during the 1950’s
and 1960’s because gambling was prohibited in the other states at that time”.
LV5 adds some additional factors that attracted more visitors, like “the installation of
air-conditioning in the casinos and hotel rooms and the good all-year round
temperature and weather”. M7 finds that Las Vegas offers “more comprehensive
product offerings” compared to Macau, because of the more intense competition during
many years. This is in line with the literature review, indicating that the open
environment has allowed the development of many new activities in Las Vegas.
Scale of the entertainment hub
For LV5, “Las Vegas has successfully repositioned itself as a family-friendly city where
you can be naughty if you want to. You can also have fun there without gambling”. He
adds that Las Vegas has both “quality and depth. Las Vegas is far superior in terms of
casinos and non-gambling facilities, of the people who go there (go to an Atlantic City
casino or one of the Indian casinos and you have a much different clientele and casino
quality) and of the quality and diversity of entertainment. Las Vegas is larger than life”.
For M7, Las Vegas offers a “greater variety within and across product classes like food
and beverage, entertainment, event, and casino, providing greater integration of
gaming and non-gaming”. According to M1, “most of the visitors in Las Vegas are
repeat visitors who tend to gamble on a smaller budget. This is why Las Vegas has
been developing its entertainment cluster to encourage them to extend their stay and
generate more revenue from them”.
LV1 highlights that “the Las Vegas model finds casinos being the catalyst for attracting
tourists who stay at a venue for 4 days and nights, enjoying gambling activity (4 hours
per day), attending shows (Las Vegas has more shows than Los Angeles, New York,
or London each night), sharing meals (large offering of highly decorated restaurants,
more meals served than in any US city except New York), and shopping (malls inside
each major casino)”. He further explains that, “even though the larger casinos each try
to offer every possible amenity to its guests, the guests constantly quest to visit as
many casinos as their feet will allow them to see (casinos are close to one another).
Walking is probably the number one activity of Las Vegas visitors”.

29. 29
These comments align with the literature review, where Kim (2010) noted that Las
Vegas revenue is very diversified, that only a small part of Las Vegas visitors are there
only for gaming and that most visitors consider gaming as a form of entertainment.
Creation of a convention hub
LV1 explains that “Las Vegas is one of the best locations in the United States to
organize conventions. The offering of space for conventions is one of the biggest in the
country. The casino operators decided to create convention centers in their casinos in
order to bring more casino revenue from the visitors attending the conventions”.
However, as LV6 explains, “the business people that attend those conventions are less
likely to gamble, but they are ready to spend more money on accommodation, shows,
and gourmet restaurants”.
MICE events were indicated in the literature review as a way to attract additional
visitors and give them an opportunity to stay.
Marketing of Las Vegas in the US and in the world
LV5 highlights the “fantastic marketing” of Las Vegas both in the US and in the world.
M7 also recognises that “Las Vegas is a great place and has created a lot of brand
awareness and reputation within the United States and around the world. Las Vegas
means entertainment, and not just gaming”.
This outstanding marketing has turned Las Vegas into one of the two most popular
summer and winter destinations, as indicated in the literature review.
Besides the factors explaining the rise of the casino industry in Las Vegas, the
interviews provided the factors explaining the decline in Las Vegas.
Factors explaining the decline of the casino industry in Las Vegas
A weak American economy, competition from casinos in easier to reach destinations,
aging leadership, and a low investment in public services seem to explain the decline.
Weak American economy in the late 2000s
LV1 explains that “Las Vegas experienced a big decrease in revenues and had to carry
out layoffs. Even though Las Vegas has been recovering, a lot of casino employees still
are unemployed”. LV3 mentioned that “the declining age of visitors (with lower
spending per person) combined with rising prices of Las Vegas accommodation,
restaurants, and shows, may explain part of the relative decline”. This factor is also in
the literature review (table 7 shows the decline in revenue in 2009-2010, and table 5
indicates the sharp increase in unemployment).
Competition from other US casinos in easier to reach locations
For LV1, “another fact that started the fall of Las Vegas was the abolition of the
‘Foreign Gaming Law’ (meant to put barriers for Nevada companies wanting to build in
other states). Several big casino operators of Las Vegas announced plans to invest in
new gaming locations, including Illinois, California, and Macau. While Las Vegas has
held up very well, these venues have captured investment revenues from Las Vegas
based casino companies, and this hurts future development in Las Vegas”. In the
literature review, it was indicated that Las Vegas had to fight with other regional and

30. 30
tribal casinos, but interviewees provided more insight by indicating that new venues
have captured investment at the expense of Las Vegas.
LV5 also finds that the location of Las Vegas becomes a serious disadvantage when
new casinos are allowed closer to densely populated areas, for instance in California.
“Las Vegas is a destination, not a day trip or a less than 2-hour drive”. So the budget
and the time spent are higher than in casinos closer to the home of the gamblers.
Aging leadership
LV1 explains that “the 3 leading entrepreneurs in Las Vegas are very old: Wynn is 73,
Adelson 81, Kerkorian 97. All 3 have been critical for Las Vegas success, but we can’t
count on them being here for any long term future”. Steve Wynn, Strip rejuvenator in
1990s, is CEO of Wynn Resorts (Wynn and Encore casinos). Sheldon Adelson is CEO
of Las Vegas Sands (Venetian and Palazzo). Kirk Kerkorian is CEO of Tracinda (MGM
Mirage). This point was not mentioned in the literature review, but is important. If
younger leaders do not emerge rapidly, the decline of Las Vegas will continue.
Low investment in public services and public demand for higher casino taxes
For LV1, “Nevada’s public education system and its other public services are among
the weakest in the US. The workforce is poorly educated and treated”. In addition, “the
anti-taxation attitudes of Las Vegas population continue, and as the government needs
more revenues, loud voices from the public demand that the casinos pay higher taxes.
Low taxes have been part of our casino success formula and that is threatened”. The
literature review mentioned the low education level, the low state gaming tax rate and
the absence of state income taxes in Nevada, but did not link them.
After the factors explaining the rise and decline of Las Vegas, interviewees were asked
to outline their strategy for Las Vegas to regain competitiveness in the casino sector.
Strategy for Las Vegas to regain competitiveness in the casino sector
Focus on Asian (in particular Chinese) visitors, especially wealthy ones
LV1 identifies “the Chinese as the ‘best gamblers in the world’”. As Thompson (2015)
clarifies, “they gamble more, are high rollers, and enjoy gambling more than others.
They believe the best thing is to win. The second best thing is to lose. The worst thing
is not playing”. This is why Chinese dominate the baccarat tables. The literature review
identified the Chinese gambling culture and the growing Chinese wealth as major
success factors of Macau, but interviews clearly identified the focus on wealthy
Chinese players as the main growth strategy for the Las Vegas casino sector.
LV2 mentions that two new mega casino resorts, to be opened by Genting and by
Crown, will follow that strategy and target Asian visitors. LV5 reveals that “the Asian
Genting’s Resorts World Las Vegas, to open in 2017, will offer much: replica of the
Great Wall of China, panda preserve, bowling alley, movie theatre, theme park and
waterpark. Crown Resorts will partner with Andrew Pascal, former COO of Wynn, to
open a casino on the Las Vegas Strip by 2018”. Chinese culture will be showcased:
LV6 explains that “several new shows in Chinese and about the Chinese culture should
be launched in Las Vegas casinos. This could be paired with new Chinese restaurants
and a Center of Chinese culture. The elaborate decoration in the main casinos for the
Chinese new year is an example of the new trend”.

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LV3 recommends “the biggest operators in Macau and Las Vegas to develop more VIP
baccarat tables in Las Vegas and to fly high rollers from China to Las Vegas”. M1
claims that “Las Vegas increased its baccarat revenues that represent now about 25%
of gaming revenues by cross-selling to their Macau clients”. To attract more Chinese
visitors, LV1 recommends to make “Chinese the second official language of the state of
Nevada”. For LV4, “at the very least, indications in Chinese should be present at
McCarran Airport, in the casinos, and on the Strip”.
Flexible regulations and low taxes
LV1 recommends that, “for Las Vegas to remain competitive in the casino industry, the
government should allow more building of new casinos and hotels and no zoning
attribution. There should not be a limitation of new gaming locations to keep a total
freedom and open market. Las Vegas experienced its biggest growth when other cities
were building their casinos”. He adds that “the taxes on the gaming industry should
remain low to encourage the development of the sector and of employment”.
This means there will be a trade-off choice to be made by the Nevada government
between keeping low taxes and raising tax rates to invest more in public services.
The recommendations seem clear: focus on Asian (in particular Chinese) visitors,
especially with higher budget; maintain flexible regulations and low taxes.
The following three sections will discuss the findings on Macau.
Factors explaining the success of the casino industry in Macau
The three main factors are the geographical and cultural proximity of Macau to fast
growing Mainland China, the scale of the casino industry, and the flexible regulation.
Geographical and cultural proximity of Macau to fast growing Mainland China
According to all interviewees, the main factor explaining the success of the casino
industry in Macau is the geographic location, being close to the fast growing Mainland
China (especially the large province of Guangdong), and to Hong Kong. As M6
explained, “the appetite of Chinese for gambling is important. Moreover, the wealth of
the Chinese millionaires is increasing every year, which means they have more money
to spend. In addition, Chinese middle class is also continuously increasing, with more
disposable income, and a desire for travel and entertainment. The infrastructure is
continuously improving in China and in Macau, making it easier and reducing the time
to reach Macau”. The literature review also mentioned the excellent geographical
location of Macau, in the Pearl River Delta.
As explained by M1, “the culture of Macau is closely related to the Chinese culture, so
Chinese visitors (including Hong Kong and Taiwan, representing about 90% of the total
visitors) feel at home in Macau. The staff of the casinos in Macau is fluent in Chinese”.
The geographic location, the monopoly within China, and the cultural proximity will
continue to bring more Chinese to Macau.
Scale of the casino industry in Macau
M7 explains that “Macau is unique and has reached a critical mass of casinos and
attractions with integrated entertainment/leisure activities unlike other Asian countries.”
M4 adds: “the scale of Macau is acting as a magnet to attract prospective gamblers.”

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M1 indicates that “the number of casinos increased from 15 in 2004 to 35 in 2014, and
the number of gaming tables increased from 1092 in 2004 to 5711 at the end of 2014”.
By comparison, “Clark County (Las Vegas) has 175 casinos (the Strip has only 41) and
4900 gaming tables, Singapore 2 casinos and 1256 gaming tables, the Philippines 36
casinos and about 1300 gaming tables, South Korea 22 casinos and 700 gaming
tables, and Malaysia 1 casino with 500 gaming tables”.
M1 adds that “Macau’s GGR increased from US$5Bn in 2004 to US$44Bn in 2014”.
M7 explains that “the US$44Bn GGR generated by Macau in 2014 was much higher
than the US$10Bn in Clark County, US$6Bn in Singapore, US$3Bn in South Korea,
and US$2Bn in the Philippines, in Malaysia and in Cambodia. Even without the VIP
segment, the mass market GGR in Macau was higher than the GGR of Las Vegas”.
The continuously increasing integrated resorts and casino clusters grow the supply,
driving the demand, because Macau is the magnet in Asia for gamblers and shoppers.
Flexible regulation
All interviewees agree that the third important success factor is the flexible regulation.
M2 explains that “the regulations from the government of Macau do not try to interfere
much with casino operations since the majority of the government revenues comes
from the casino industry. This creates a lot of freedom for the casino operators”. M6
specifies that “the Chinese central government gave a boost to Macau by keeping
Macau as the only gambling destination in China, and by allowing individual visit
permits for some Chinese to visit Hong Kong and Macau to help the economy after the
SARS epidemy”. M8 reinforces that view: “China will continue to support Macau to
avoid that Chinese go elsewhere to gamble their money away”.
For M5, “the ease to bring money into Macau, partly thanks to junkets for high rollers
and to UnionPay that allows clients to take money from their Chinese accounts, is
important to keep a healthy premium and high-roller market alive”. He adds that “many
high limit players buy jewelry products (and return them, losing a 5 to 10% fee) just to
get cash to gamble. This is why some casinos consider lending money to high rollers”.
As explained by M1, “the tax rate of the gambling industry in Macau is 39% (35% for
the government and 4% for charity and social causes). The government of Macau
trains the dealers for free and there is no income tax. Moreover, casino hotels are very
profitable in Macau because of low corporate taxes (12%) on non-gaming revenues”.
M5 also notes that “China is changing its holiday system from two golden weeks at the
same time (May and October) for everybody, to a flexible number of days per year to
spread out the holidays and reduce the congestion”.
The key success factors of the casino industry in Macau are quite similar to the factors
in Las Vegas, with the proximity to a large population, the scale of the casino industry
and the flexible regulation.
Besides the key success factors of Macau, the interviewees provided indications of the
major constraints to the development of the casino industry in Macau.
Factors explaining the constraints of the casino industry in Macau
For interviewees, the five major constraints are the overdependence on VIP gambling
and junket operators, the lack of land and of labour, the growing competition from other

33. 33
Asian gambling destinations, recent tighter regulations and controls, and the negative
influence of age and education level on Chinese gambling behaviour.
Overdependence of the casino industry on VIP gambling and junket operators
The literature review attributed the rapid GGR rise in Macau to the baccarat gambling
by VIP, financed by junket operators. M1 specifies that “VIP baccarat increased from
MOP30Bn in 2004 to MOP213Bn in 2014, while mass baccarat increased from
MOP6Bn in 2004 to MOP107Bn in 2014”. For him, the current decline is due to “the
tightening of the junket operators by the government and the loss of trust of VIP players
in junket operators, because some junkets ran away with the money of their clients”.
M5 adds that “the US pressure Macau to rely less on gaming revenue to reduce money
laundering. But the government receives at least 80% of its revenue from gaming”.
M6 is more positive and finds that “Beijing makes transparency possible in the junket
world, which may restore the needed trust. The main cause of the VIP decline is the
reduced liquidity in China due to the reduction of shadow banking. The crackdown of
the Chinese government on illegal transactions has reduced the influx of capital
towards Macau”. The VIP business is much dependent on liquidity, provided mostly by
junkets. For M5, “junkets finance 80% of VIP business”. He states “the way junkets are
lending money to high rollers makes them important for the future of the casino industry
in Macau. VIP represented 60% of GGR in 2014 (down from 72% in 2004), mass
market 36% and electronic gaming 4%”. However, M4 indicates that the “VIP business
generated only 28% of the gaming operating profit in 2014, down from 41% in 2011”.
So, with the declining VIP market and the rising mass market, Macau is moving to a
more sustainable balance.
Concerning the high rollers, M1 says that “China UnionPay reduced the maximum
amount available for withdrawal, which causes the VIP players to spend less money in
casinos during their stay”. M2 acknowledges that “the big junket operators tend to
consolidate while the small ones disappear, which will create a stronger junket industry
once the gaming revenue goes back up”. M3 explains that “the margin casino
operators take on high rollers is only 11% because of the 39% taxes and the fact that
junket operators take 50% of the VIP revenue and cover all the high-roller’s expenses”.
The current rebalancing from the VIP market to the premium and mass markets means
that the overdependence of the casino industry on VIP gambling and junket operators
has been decreasing during the last months.
Lack of land and of labour
A second constraint is the lack of land and of labour in Macau. All interviewees agree
that it is difficult to develop new large entertainment facilities and integrated resorts in
Macau because of the lack of land. According to M5, “Macau is too small to develop
entertainment”. The dream of M1 is “to develop cross-selling to existing visitors via a
new cluster to be developed, but there is not enough land in Macau”. The literature
review had already mentioned the limited land. So Macau will have to look to
neighbouring islands to find additional space to develop the non-gaming activities.
All interviewees also recognise the lack of labour. M6 attributes it “to the Macau
government imposing that dealers and many other casino workers must be Macau
citizens”. M5 confirms the low unemployment rate of the literature review.
“Unemployment rate is only 1.7% and underemployment 0.4%. Gaming employs
87,000 persons (22% of the employed population). Median monthly earnings are
MOP16,000 (US$2000)”. For M3, “the very low underemployment causes a rise in

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salaries and a difficulty to recruit adequate personnel to fill the positions”. M6 adds that
“salaries represent 5 to 10% of GGR, but a dealer costs US$2500 to 4500 per month,
while a table generates US$5000 per day, so casinos will continue to raise the salaries
to recruit more dealers and personnel for new casinos at the expense of other sectors.
Salaries are increasing by about 15% per year. Quality of service remains an issue,
because of the lack of competition in the labour market”. As a solution, he hints that, “if
the labour shortage increases, the Macau government may open the labour market to
Hong Kong unemployed”. In conclusion, the government of Macau will have to relax
some employment regulations to allow further development.
Growing competition from other Asian gambling destinations
The literature review mentions the growing regional competition in South East Asia, but
interviewees are more specific. M8 believes that “gaming in Asia will proliferate as it is
the best way to indirectly tax consumption”. For him, “countries would prefer to keep
the tax dollars from their residents for themselves rather than let them go elsewhere”.
M5 adds that “other Asian countries have more land to develop more amenities than
Macau”. M3 says that “junkets are looking all over Asia to expand. It is the biggest
expansion phase ever right now. Using their client networks and large capital, junkets
try to repeat the Macau formula in other Asian countries. New casino destinations have
lower overhead than Macau and offer greater privacy to wealthy gamblers”. So new
casinos are developing in several Asian countries, including South Korea, Singapore,
the Philippines, Vietnam, and possibly Japan, India, and Thailand in the longer term.
For M6, “South Korea is currently the biggest competitor of Macau in the VIP and
premium mass markets”. M5 adds that “South Korea represents the biggest threat for
Macau since it is expanding its premium offerings for Chinese gamblers”. However, M3
discounts the threat because of “the bad reputation of South Korean casinos for
cheating their customers and the absence of regulation to protect gamblers”.
M1 explains that “the development of the casino sector in Singapore has been fast, but
that it is now stagnating, and it had no negative effect on Macau”. He adds that
“Singapore has more restrictions than Macau concerning the gaming industry”. M3
specifies that “Singapore allows no real junket operators; it allows only three ‘tour
operators’, who cannot extend credit to gamblers”.
M5 finds “the Philippines little attractive (security problems, bad infrastructure, and
regular floodings), while Macau offers security and good infrastructure for gamblers”.
However, M3 explains that “junkets can receive higher commissions in the Philippines
due to the lower tax rate (15% of GGR for VIP compared to close to 40% in Macau)”.
Still, M3 is convinced that “Macau is better, because the Philippines have a different
culture, are far, with bad infrastructure, and cope with safety problems”.
For M3, “Vietnam seems attractive thanks to its proximity to China and to lower
minimum bets”. But M5 claims that “Vietnam has stricter financial rules than Macao”. In
addition, M2 finds that “Cambodia and Laos can become other dangerous competitors
for Chinese high rollers”. M6 claims that “Japan can be a very big market for gambling,
but the decision will probably be postponed”. However, M7 “does not see any major
challenges, even if Japan opens up”. M6 believes that “India has much gaming
potential”. He adds that “Thailand could become a threat, but not with the current king”.
In conclusion, Macau is facing growing competition in Asia, particularly from South
Korea, the Philippines, and Vietnam.

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Recent tighter regulations and controls
Interviewees mention that “the money transfers from China to Macau by the UnionPay
system could become monitored live by the Beijing government”. For M5, “this would
pose a threat to revenue from premium mass players and low-end VIP players using
UnionPay to get their money out of China to gamble in Macau”. M3 adds that “the
Chinese government seems eager to dictate further rules to be applied in Macau”.
Moreover, a smoking ban in VIP rooms could further deteriorate the premium mass and
VIP revenue. M2 explains that “the smoking ban on mass gaming floors since October
2014 caused a fall of 15% in mass revenue, although some casinos have reclassified
certain premium mass areas into VIP areas to allow smoking to continue. A smoking
ban in VIP rooms may have a similar negative impact on VIP revenue”.
M5 states that the “Macau government imposed a table cap of 5500 gaming tables,
plus 3% per year from 2014, possibly reducing the gaming growth in the coming years”.
However, M6 explains that “the new casinos will probably receive each 200-250 new
gaming tables in anticipation of the 3% annual growth above 5500”. M8 adds that “the
Invididual Visit Scheme for Chinese was gradually restricted from two visits per month,
to one visit per month, to one visit per two months, and then to one visit per three
months”.
According to M5, “around 2020, most licenses of casino operators will be reviewed and
if some casino operators (especially the Americans Wynn and LVS) do not develop
enough non-gaming activities, their license could be given to a new Chinese player.
This is because the Macau government owns all the land and the casino’s buildings
and furniture”. That is why M6 explains that “the renewal of current licenses will have a
cost, which is the commitment by casino operators to develop non-gaming activities”.
As a summary, recent tighter regulations and controls are likely to limit the growth of
the gaming revenue in Macau in the coming years.
Negative influence of age and education level on Chinese gambling behaviour
M1 explains that “younger and more educated Chinese tend to gamble less than older
and less educated Chinese, so the market growth should decline over time” and refers
to Zeng (2013). M9 cites Tang (2015) explaining that “wealth creation in China is
changing from ‘resources and relationship-based’ (coal mining and property) in the last
five years into ‘innovation & entrepreneurial-based’ (internet and consumer services) in
the next five years”. These new millionaires may also be gambling VIP style, but they
will probably bet less than the previous generations. So, while the number of VIP
players may still grow, their average bet size will be lower. This new element discoved
during the interviews explains the gap of culture between generations of Chinese
players.
If the success factors are similar in Las Vegas and in Macau, most of the constraints
are different and specific to each gambling location.
After the key success factors and the main constraints, interviewees were asked to
outline their strategy for Macau to remain competitive in the casino sector.

36. 36
Strategy for Macau to remain competitive in the casino sector
All nine interviewees expressed a vision of the development of the mass market and of
the premium market (financed by casino operators), and the relative decline of the VIP
market (financed by junket operators). M4 expects “a moderate increase in GGR, with
a decrease of VIP and an increase in mass market.” On this issue, M1 expects “a
slower annual growth, between 0 and 10% due to more visitors from Mainland China.
The wealth of Chinese millionaires is increasing, so they have more money to spend.”
M3, M5 and M6 expect “an annual growth of 7% between 2015 and 2020, in line with
Mainland China growth”. M2 is the only pessimist “because of the decline in the VIP
business and the growing competition for Chinese high rollers in other countries”. For
M9, “the longer term trend seems to be development of the sector for mass-market
tourism”. M7 claims that “now is the right time to further develop the mass market and
to transform Macau into the ‘World Centre of Tourism and Leisure’”.
To further develop the mass market, Macau will need to attract the 200 million Chinese
expected to travel outside China by 2020, to expand the infrastructure and
transportation connectivity with Mainland China and Hong Kong, to increase the length
of stay of visitors in Macau by developing entertainment, to use Hengqin Island to
develop Macau, and to build new hotel rooms in Macau and on Hengqin Island.
Attract the 200 million Chinese expected to travel outside China by 2020
M1 indicates that “the most important driving force for growth of the casino sector in
Macau is an increasing stream of new visitors”. He explains that “the continuous growth
of Macau’s gaming industry was supported until 2003 by Hong Kong visitors, then by
Guangdong visitors, and now increasingly by other Mainland China provinces.” He
estimates that “200 million Chinese will travel outside China and spend US$306Bn by
2020, compared to 97 million Chinese spending US$120Bn in 2013” (figures are
confirmed by M6 in appendix F). M5 recommends that “casinos in Macau should
develop more diversified shows and entertainment to attract Chinese customers”.
Expand the infrastructure and transportation connectivity with Mainland China
and Hong Kong
M5 provides appendices H and I and explains that “the infrastructure is continuously
improved to ease the access of more visitors. The Beijing-Guangzhou high speed rail is
reducing the travel from twenty-two to eight hours. The Guangzhou-Zhuhai intercity
train is reducing the travel to forty-five minutes and is being extended to Macau airport.
The expansion of Gongbei border gate is increasing the daily capacity to 350,000,
while the Lotus bridge (linking the Cotai Strip to Hengqin Island) can handle 70,000
visitors per day. The ferry terminals are also upgraded. The new Pac On Ferry
Terminal will accommodate up to 15 million passengers per year. Macau airport has
expansion plans to service 5.6 million passengers in 2015, up to 15 million in 2039.
The Hong Kong-Macau bridge will reduce the driving time from Hong Kong, but won’t
have a big impact on visitor numbers because the visitors from Hong-Kong have been
decreasing during the last years, and drivers will have to park their cars at the end of
the bridge. The Light Rapid Transit (LRT, light metro) is planned to start in 2016”. As
the LRT will allow visitors to visit more casinos and shops, it will contribute to increase
the total revenues.
The interviews provided a clear outline of the future transportation network, which will
be continuously upgraded to transport more visitors and reduce travel time.

37. 37
Increase the length of stay of visitors in Macau by developing entertainment
The dream of M1 is to “develop cross-selling to existing visitors via new clusters to be
developed, for example around entertainment and banking activities”. M5 states that
“new casino developments will drive demand through 2016 and propose entertainment,
encouraging to increase the length of stay from one day on average to two days”.
M4 claims that “the Hong Kong-Macau bridge will bring more visitors from Hong Kong
airport for MICE events. MICE visitors gamble less, but spend more on shopping,
accommodation, restaurant, and entertainment”. He adds that “Sands China is an
example of a broad and deep mass tourim offering to appeal to the broadest set of
customers during several days, with themed attractions, 9300 hotel rooms, 1.2 million
square feet of shopping, 2 million square feet of conference and exhibition, concerts
and sporting events, and family-friendly entertainment”. M6 provided appendices J and
K showing the potential increased overnight visitation and length of stay in Macau.
Use Hengqin Island to develop Macau as a business and leisure destination
M1 is convinced that “the development of neighbouring Hengqin Island into an
entertainment destination could attract families and many additional visitors to Macau”.
He adds that “the development of Hengqin (see appendix G for provided map) could
also include real estate development for Macau citizens (lowering their cost of housing)
and a finance center (because of lower banking taxes)”. M5 reinforces this view: “as
Macau is too small to develop entertainment, Hengqin is a good alternative to host
entertainment complexes. Several casino operators are buying plots in Hengqin to
develop non-gaming activities”. This new element makes it possible for Macau to fully
develop its non-gaming activities and to attract new customers, including families.
Build new hotel rooms in Macau and on Hengqin Island
To accommodate more visitors during longer stays, more hotel rooms are required.
M4 estimates that “over 13,000 new hotel rooms are in construction or planned in
Macau by 2018”. He refers to appendix E, showing 24,240 rooms in 4/5 star hotels in
2014 and 37,306 rooms expected by 2018. Even by adding the 2,500 3-star, and 800
2-star rooms in Macau and the 10,000 planned rooms on Hengqin, the number of
rooms will remain well below the 150,000 rooms in Clark County (Las Vegas).
In addition, M1 finds that “hotels are very profitable in Macau because of the low
corporate tax (12%)”. He believes that “the potential is high because hotel income
represents only 2% of casino revenues in Macau compared to 25% in Las Vegas”.
In summary, Macau needs to develop the mass market by attracting the 200 million
Chinese expected to travel outside China by 2020, by expanding the infrastructure and
transportation connectivity with Mainland China and Hong Kong, by increasing the
length of stay of visitors in Macau through entertainment, by using Hengqin Island to
develop Macau’s non-gaming sector, and by building new hotel rooms in Macau and on
Hengqin Island.
The recommendations for Las Vegas and for Macau are different, but complementary.
Each gambling destination should learn from the other one. Las Vegas needs to focus
on Asian (in particular Chinese) visitors, especially wealthy ones (Macau is the model),
while maintaining flexible regulations and low taxes. Macau needs to develop the mass
market (Las Vegas is the model).

38. 38
Discussion
The objective of this dissertation was to compare the differences in competitiveness
between Las Vegas and Macau and to formulate recommendations for the future
development of the casino industry in Las Vegas and in Macau. It was designed to
identify the key determinants of competitiveness in both locations and to act on them to
increase their competitive advantages.
The literature review and the research of this dissertation suggest that Las Vegas and
Macau have similar success factors, but different constraints.
During the interviews, several unexpected results emerged. It was only during the visit
to Macau that the lack of entertainment was noticed, the number of shows was very
limited and there were very few attractions to visit. On the contrary, the retail operations
were more developed than described in the literature. A new element found during the
interviews was that the Macau government remains the owner of the land, the buildings
and the furniture of casinos. Another important discovery is that, in the VIP high-roller
business, junkets take 45% to 50% of GGR and government about 40% of GGR,
leaving the casino operators with a margin of only 10-15% of GGR. Another difference
with the literature review was the delay in light rail and airport infrastructure
construction. A major point in the interviews is that all the growth in the number of
visitors to Macau is coming from visitors from Mainland China and that the number of
visitors from the rest of the world is declining. That element is visible in table 13.
Table 13: Evolution of visitors (in million) in Las Vegas and in Macau 2008-2014
Sources: LVCVA 2015, Statistics and Census Service Macau SAR 2015

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5. CONCLUSIONS
The most significant findings regarding the differences in competitiveness of Las Vegas
and Macau in the casino sector, as well as the strategy of each destination, are
outlined in this chapter. The application of Porter’s Diamond framework to the casino
sector in Las Vegas and in Macau provided determinants of competitiveness, while the
interviews with academic experts, casino executives, and gaming consultants in both
Las Vegas and in Macau provided a ranking of the key success factors and of the
constraints of each hub, and the recommended strategy for each gambling destination.
The following discussions provide the overall conclusions for this study based on the
constituent parts of the analysis in accordance with the original research questions
posed in chapter 1.
1. What factors explain the rise and the decline of the casino industry in Las Vegas?
The literature review determined the following determinants of competitiveness of Las
Vegas in the casino sector. The factor conditions highlight that Las Vegas has plenty of
land available, its bad geographical location is compensated by good infrastructure,
and water is becoming an increasing constraint. Human resources with low skills are
widely available at a relatively low cost. UNLV has many experts and extensive
resources related to the gaming industry. Capital resources are also widely available.
The demand conditions indicate a stabilisation in the number of visitors (about 40
million per year), 80% of them still coming from the U.S. (especially Western States).
Total revenue has bounced back since the crisis, but is still under the 2007 level,
because gaming has not fully recovered. Regarding related and supporting industries,
Las Vegas remains the best in the world for amenities as most casinos include them to
keep the customers on the location. MICE events attract additional visitors and give
them an opportunity to stay. In terms of firm strategy, structure, and rivalry, Las Vegas
is an open city, but has to fight with other regional and tribal casinos in the U.S. market.
The intense rivalry has forced the operators in Las Vegas to differentiate. Chance has
helped the development of the casino sector in Las Vegas, first with the railway
switching junction, and then with the Hoover Dam and with the Second World War.
Finally, government has relatively little influence in Las Vegas.
The interviews provided and ranked the factors explaining the rise and the decline of
the casino industry in Las Vegas. Las Vegas managed to attract visitors by being close
to Los Angeles region, by offering an excellent transportation network (especially
McCarran airport and I-15 highway), by being an ‘open city’ (which created competition
and the development of a large offer of amenities), by providing the best entertainment,
by creating convention centers and convention space, and by marketing itself better
than other gaming destinations. However, the rise has been followed by a decline. The
main reasons for the decline of the casino sector in Las Vegas have been a weak
American economy, competition from casinos in easier to reach destinations
(especially tribal casinos in California), aging leadership, and a low investment in public
services. The result is that Las Vegas casino operators don’t invest much in Las Vegas
anymore.
2. What factors explain the success and the constraints of the casino sector in Macau?
For Macau, the literature review provided, as factor conditions, an excellent geographic
location (in the Pearl River Delta), a good infrastructure, a good education level, but
major constraints include labour shortage, and limited land. The demand conditions
indicate a small domestic market with high income, and a large hinterland market. The