The global gambling industry can be roughly divided into four major sectors: Casino, Lottery, Sports betting, and other forms of gambling, each accounting for about a quarter of the market size, with an overall market valuation of approximately 600 billion US dollars. Lotteries are usually operated by governments, and sports betting is not elaborated here due to its complexity. As for traditional gambling forms like Mahjong, Poker, and dice, they are difficult to quantify due to their dispersion. This article focuses on a systematic analysis of the most representative Casino sector.
Casinos are distributed globally, and many non-mainstream destinations also list them as a pillar industry, such as Montreal and Nova Scotia in Canada, Singapore, Sun City in South Africa, and even Nan'ao Island and the border city of Suifenhe in China.
There are three cities that have long been considered representatives of the casino industry: Las Vegas, Macau, and Monte Carlo. Once upon a time, Las Vegas in the United States was undoubtedly the king of the global gambling industry. However, as times have changed, this pattern has been broken. In 1999, Macau's gambling revenue was only half that of Las Vegas; by 2015, Macau had achieved seven times the revenue of Las Vegas, which is a hundred times that of Monte Carlo. Today, Macau has long become the "absolute center" of the global gambling industry, and its business structure is worth in-depth analysis.
How do casinos profit?
The essence of the gambling business model is to "avoid participating in the bet," meaning the casino itself does not gamble with the patrons but designs probability rules that allow players to compete against each other, with the casino only collecting a fixed commission. For example, in the roulette game, the wheel has numbers 1-37, but bets are only allowed on numbers 1-36; if it lands on 37, the casino wins everything.
Under such a design, the casino's profit is 1/37, about 2.7%. Another example is the Big Small game, which uses three dice to produce a number from 3 to 18. If three dice show the same number, a "triple," regardless of the players' bets on big or small, the casino wins, maintaining a profit margin of about 3%.
Almost all casino games—except for Blackjack, where players play against the dealer—have this kind of "commission mechanism" built in, allowing the casino to achieve stable profits over long-term operations. Theoretically, the casino's average return rate is 97%, meaning that for every 100 yuan bet, players will eventually only get back 97 yuan.
The core of casino profitability lies in the "betting volume" indicator, i.e., the total amount of bets placed by players. If the total betting amount is 10 billion yuan, the theoretical income for the casino is 300 million yuan. The movie "Casino" vividly presents this logic. Interestingly, the most common divisions in casinos include gaming tables and slot machines. Compared to gaming tables, slot machines have more concealed rules, and their payout rates also vary. It is said that in the early days of operation in Macau, the payout rate of slot machines was only 95%, which was later raised to 97.5% by the Sands Group.
In comparison, the Hong Kong Jockey Club has a return rate of 75%, and the China Welfare Lottery has an even lower return rate of only 50%. In this context, casinos appear to be "more generous."
How do casinos become tools for money laundering?
Another function of casinos is to provide a "whitening" channel for gray funds. Some corrupt officials use illegal gains to buy casino mud chips, then bet on two opposite outcomes (such as big and small), winning and losing half but ensuring the legalization of the principal part. Casino mud chips must be bet before they can be converted into cashable "real chips," during which the casino collects a 3% conversion fee.
The business model of Macau Entertainment: Real estate-like casino operations
Macau's gambling industry cannot be discussed without mentioning the "Gambling King" Stanley Ho and his Macau Entertainment company. Macau Entertainment is essentially not just a casino operator but more like a real estate company. Its core asset is not its guest rooms but the commercial space inside composed of multiple gambling halls. Macau Entertainment adopts a "leasing" model, renting gambling halls to various "big shots" for operation, focusing on collecting rent. This model is similar to department stores renting out counters, avoiding risks and not involving in disputes.
This move is highly business-savvy. In the complex relationship of Macau's gambling ecology, if Stanley Ho personally operated all the gambling halls, he would be deeply mired in personnel and risk mires, unable to ensure his own safety. On the contrary, by letting local big shots manage operations and acting as a "landlord" himself, not only can he steadily collect rent, but he can also maintain the stability of the casino ecology.
Gambling hall ecology and operating mechanisms
A typical gambling hall is equipped with 4 to 6 gaming tables and requires a dozen employees to maintain operations, with significant operating costs. Gambling halls usually have to pay rent and a share of the profits to Macau Entertainment. According to industry rumors, if the daily business volume is less than 100 million Hong Kong dollars, the gambling hall may not be able to break even. Under this pressure, gambling halls often need to use "stacking boys" to promote their business.
Points system and customer maintenance
To enhance customer loyalty, casinos widely implement a points membership system. Members earn feedback points by inserting cards when betting, with ordinary visitors getting a rebate of about 0.25%, and high-end players enjoying up to 0.8% points return. In high-end casinos like Grand Lisboa and Emperor, the levels of silver to black gold cards offer different rebates, potentially saving significant room fees or even the entire cost of a wedding banquet.
Stacking boys: The invisible promoters of Macau's gambling industry
Stacking boys are responsible for introducing customers, arranging accommodation, and accompanying experiences, and are the core of customer acquisition for gambling halls. They need to establish long-term relationships with potential gamblers, cultivate feelings, and eventually lead them to a specific gambling hall. For every 100 million Hong Kong dollars in betting volume completed by a gambling hall, stacking boys can earn a commission of 300,000 to 500,000 yuan. However, due to the long customer cultivation cycle and high maintenance costs, their actual income is far less glamorous than it appears.
Moreover, the commission of the gambling hall needs to be distributed among multiple stacking boys, with fierce competition. Even if a gambling hall's daily revenue reaches 100 million yuan, it has to bear the profit-sharing of 10 to 20 stacking boys, and the profit pressure can be imagined.
Gambling and "faith": High rollers dominate the market structure
Why do gamblers favor certain gambling halls despite the similarity of casino products? The answer lies in "luck" and "faith." High rollers, who bet tens of millions, value the "luck" of the gambling hall, choosing only places where they have previously won money. When the Sands Hotel opened in 2004, with modern facilities and high-quality experiences, it only accounted for 5% of the market share. The old Grand Lisboa still held 95% of the market, due to the "faith effect."
The high roller area is located on the third to fourth floors of the casino, which is the core profit area, accounting for more than 80% of the casino's income. Even if hundreds of slot machines in the hall operate simultaneously, their revenue cannot match the bet of a single chip from a high roller.
The structure of Macau's casinos has long been dominated by Macau Entertainment, currently holding about 60% of the market share. Although five-star casinos such as Sands, Galaxy, and MGM have opened, Grand Lisboa still firmly controls high roller resources with decades of "luck inheritance."
Despite the rise of online gambling and offshore casinos, Macau's physical casinos, especially the high-end gambling halls controlled by Macau Entertainment, still hold a dominant position in the market. As customer generations change, Macau Entertainment's market share is slowly declining at a rate of 1% per year, but its core resources and business structure are still difficult to shake in the short term.
